The latest on UK industrial production, trade and construction
Commenting on the UK economic data from the ONS, Chris Williamson, said:
“UK manufacturing rebounded in July, according to official data, adding to hopes that rising goods production will act as a prop to the economy and help counter slower consumer spending in the second half of the year.
“Data from the Office for National Statistics showed manufacturing output rising 0.5% in July, its biggest monthly gain since December. The data bring welcome news after the 0.3% drop in production recorded in the second quarter and brings the official data more into line with recent upbeat business surveys. The official data have been especially volatile in recent months, in part due to car production slumping in the second quarter but reviving again in July, making the underlying health of the manufacturing sector as a whole difficult to gauge. The stronger official data therefore add some relief to worries that the official data were showing the sector facing another downturn despite the weakened pound.
“The manufacturing improvement helped drive a 0.2% rise in industrial production at the start of the third quarter, offsetting a 1.2% drop in output of the extractive industries.
“There was disappointing news on construction, however, where output fell 0.9%, below all economists’ forecasts polled by Reuters. Export data also disappointed somewhat. Although rising 1.2% in the three months to July, the increase in overseas goods sales in the latest three months was the weakest since October of last year.
“Further manufacturing growth is expected in August, given the solid survey data, but the manufacturing upturn needs to be looked at in the wider context of sluggish exports, declining construction activity and consumers being squeezed by low wages and rising prices. In this respect, the August PMI surveys highlighted how the economy continued to lose momentum as the robust manufacturing performance was countered by slower growth in services and construction. While the data suggest the weakened exchange rate may be helping the economy in terms of rebalancing towards exports and goods production, the rate of improvement remains modest. Slowdowns in services and construction are a concern and highlight subdued domestic demand and investment trends.
“The surveys and official data so far point to another sluggish economic expansion of 0.3% in the third quarter, though momentum continues to be gradually eroded.”