According to official figures, UK manufacturing is continuing to lead the recovery effort in June, despite an unplanned fall in industrial production. The Office for National Statistics (ONS) reports manufacturing output increased 0.3 per cent in June, paralleling May’s rise. Also, early shutdowns for maintenance in the North Sea led to a 0.5 per cent reduction in output. With shutdowns of any type in manufacturing, GDP for the country has a small hint of a stall in growth, which ultimately negatively affects overall growth, even if just a minimal amount.
Despite the recent let down in industrial production from May to June, the ONS will maintain its second quarter growth forecasts. Economists were baffled at the ONS’s first estimate for the second quarter, which reported at double their forecasts (1.1 per cent).
The ONS said the estimate would remain the same compared to the data and further added, maintenance resulted in a 6 per cent drop in oil and gas output.
Although most other sectors are climbing hard to get out of recovery mode, car production and ship building are both on the rise in terms of output. They are ahead 22 and 41 per cent, respectively. Manufacturing output overall is still down 10 per cent from the 2007 high.
“The suspicion going forward is that manufacturing will lose momentum. There are hints that the second quarter may have been the peak of manufacturing activity,” said Howard Archer, chief economist at IHS Global Insight.
Alan Clarke, economist at BNP Paribas added: “The burden of rising imported inflation that the economy has endured over the last 18 months or so is showing signs of reversing.”
Also on Friday, sterling fell half a cent versus the dollar early in the day, before recovering to close at $1.598 on the news of weak US jobs data.