UK Industrial production rises to 2.1% as GBP/USD falls to 10-week low
The UK industrial sector returned to health in November after manufacturing output rose more than expected and the North Sea’s biggest oilfield resumed production following a temporary closure.
But the weak pound drove up the cost of imports and left Britain with a record trade deficit with the EU, months before the government triggers article 50 to begin the process of leaving the bloc.
The rise in manufacturing production and more buoyant energy sector failed to mark a recovery from poor figures for October and September, and push the broader measure of industrial output into positive territory over a three-month period.
The Office for National Statistics (ONS) monthly estimate of manufacturing increased by 1.3% in November, with industrial production pushing ahead by 2.1%. The largest contribution came from pharmaceutical companies, which increased output by 11.4%.
Overall, UK economic growth in the fourth quarter edged slightly lower to 0.5%, from 0.6% in the third, according to new figures from the National Institute of Economic and Social Research (Niesr).
The first official estimate of growth in the fourth quarter and 2016 will be published on 26 January by the ONS.
The growth in industrial production was also driven by an 8.2% month-on-month increase in mining and quarrying output.
Analysts polled by Reuters had expected a 0.5% manufacturing gain and industrial output to increase by 0.8%.
The construction sector, which has been badly affected by Brexit uncertainty, slipped back by 0.2% following falls in repair work and commercial building.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said the effect of the rise in industrial production would not be enough to push up GDP in the fourth quarter of 2016.
“Industrial production will be lower in the fourth quarter as a whole than in the third, despite November’s surge,” he said.
“We think production likely fell in December, despite the improvement in manufacturing surveys at the tail end of 2016, because unusually warm temperatures in December likely depressed output in the energy supply sector.
“As a result, industrial production likely fell for the second consecutive quarter in the fourth quarter – technically marking a recession for the sector – leaving the services sector as the sole locomotive of growth at the end of last year.”
