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United Kingdom manufacturing output rise surprises

09 September 2017

According to the Office for National Statistics output rose by 0.5 per cent in July driven in part by the production of new cars after a decline in June.

Manufacturing output rose 0.5% on the month which was slightly above consensus forecasts with the year-on-year increase strengthening to 1.9% from 0.6% previously.

Earlier this week, United Kingdom factories questioned by business advisory firm BDO and EEF, the manufacturers' body, reported bumper order books, suggesting it has taken time for exporters to feel the benefits of sterling's collapse which has also made United Kingdom goods more competitive overseas.

She remains optimistic, however, that growth should hold up fairly well in the second half of the year, rather than slow. Meanwhile, mining and quarrying output fell 1.2 percent. She concedes that the rise of 0.5% in manufacturing output in July, the biggest increase since December, was robust. The pace of expansion was forecast to accelerate to 1.7 percent in July.

The visible trade deficit increased by GBP 1.1 billion to GBP 34.4 billion in the three months ended July.

"The trade deficit was little changed in the three months to July with an increase in imported goods partially offset by an increase in exports of services", she said.

In July, the total trade deficit was nearly stable at GBP 2.87 billion. At the same time, the visible trade deficit totaled GBP 11.57 billion in July compared to GBP 11.53 billion in the previous month. But there are some signs that net trade could provide more support in the quarters ahead.

Production in the electrical equipment industry grew the most by 19.1 percent annually in July, followed by transport equipment industry with 13.1 percent spike.

However, the outlook for 2018 and 2019 were lowered to 1.2 percent and 1.4 percent, respectively.

As accelerating inflation squeezes consumer spending-a key engine of United Kingdom growth-economists say that production and trade will have to do more heavy lifting to stave off the already-evident economic slowdown.

United Kingdom manufacturing output rise surprises