- U.K. Manufacturing Drops for Second Straight Month
Manufacturing output in the U.K. fell for the second straight month in March, in a further signal of torpid economic growth.
Production output from British manufacturers declined 0.1% on month in March after falling 0.2% in February, in the second straight drop after almost a year of growth. The sector was dragged down by weaker electrical equipment and pharmaceutical production, the Office for National Statistics said Thursday.
That manufacturing weakness comes as overall industrial production edged 0.1% higher on month, partly thanks to increased power generation in a month of cold weather.
In contrast to that increase, the unusually inclement weather contributed to a poor performance from the country’s construction sector, with housing, public and repair works all suffering sharp declines, the ONS said.
“Today’s figures support previous estimates showing the economy was very sluggish in the first quarter,” said Rob Kent-Smith, head of national accounts at the ONS.
The data marked a continuation of the U.K.’s weak economic performance, and comes ahead of the Bank of England’s scheduled monthly policy statement later on.
Until recently, investors were broadly confident that the BOE would nudge rates up in May, derivative contracts suggest, but this certainty has evaporated following a string of disappointing economic data. The central bank is being tugged in two different directions, economists say.
Officials have expressed concerns that the U.K.’s exit from the European Union could hinder the economy’s ability to cope with stronger demand over the longer term–suggesting rates should be higher–but evidence that uncertainty is temporarily weighing on industrial production and investment is an argument for borrowing costs to be kept low.
The U.K.’s trade deficits with the European Union and the broader world both rose on the month in March, driven by an increase in imports of road vehicles and electrical machinery, the ONS said.