Economy

UK Industrial Production Growth Slows On Oil & Gas Extraction

UK Industrial Production Growth Slows On Oil & Gas Extraction

The UK's manufacturing output grew at the fastest pace this year in July, according to official figures.

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.

United Kingdom industrial production grew at a slower pace in July due to weak oil and gas extraction, data from the Office for National Statistics showed Friday.

For Ruth Gregory, UK economist at Capital Economics, the data show that the industrial and construction sectors are still providing little offset to the consumer slowdown.

The stronger-than-expected manufacturing output growth in July boosted the pound against the dollar by 0.76% to $1.32.

Kate Davies, ONS senior statistician, said: "Manufacturing remains relatively subdued since the start of the year, though July showed the first significant monthly growth of 2017, with vehicle production increasing partly thanks to new models rolling off the production lines".

Construction growth slumps to one-year low

Chris Williamson, IHS Markit's chief business economist, said: "While the data suggests the weakened exchange rate may be helping the economy in terms of rebalancing towards exports and goods production, the rate of improvement remains modest".

The trade deficit in goods and services in July was unchanged at £2.872 billion, while Britain's trade in goods deficit with the rest of the world widened slightly to £11.567 billion.

Construction output fell by 0.9% in the month of July, while falling 1.2% on a three month to three month basis, a measure which removes some of the volatility of monthly numbers.

The manufacturing jump helped total production rise by 0.2% in July, despite oil and gas extraction dragging on the wider industry by falling 1.4%.

In July, the total trade deficit was nearly stable at GBP 2.87 billion. "Exports of goods to the European Union increased but this was offset by falling goods exports to the rest of the world". A weaker contribution from net trade and more subdued consumer spending growth were the main reasons for the slight downgrade, the lobby said.

Howard Archer, chief economic Advisor to the EY ITEM Club, said the ONS data "points to a United Kingdom economy still struggling to break out of sluggish growth".

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