UK industrial output grows at fastest rate so far in 2017, finds ONS

Industrial production rose by 0.7 per cent in the month, more than double the 0.3 per cent financial analysts had expected

Ben Chu
Economics Editor
Friday 10 November 2017 10:42 GMT
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Manufacturing was up by 0.7 per cent in September
Manufacturing was up by 0.7 per cent in September

UK industrial output grew at its fastest rate seen this year in September according to the Office for National Statistics, in data which is likely to make the Bank of England feel more comfortable about its decision to raise interest rates for the first time in a decade last week.

The ONS reported that industrial production rose by 0.7 per cent in the month, more than double the 0.3 per cent financial analysts had expected.

Within that, manufacturing rose by 0.7 per cent, also ahead of expectations.

The ONS further reported that the UK’s trade in goods deficit was £11.25bn in the month, better than the £12.8bn analysts had pencilled in, with exports rising faster than imports.

The overall trade deficit, including services, came in at £2.75bn, down from £3.4bn in the previous month.

The data briefly pushed up the pound to $1.3167, although the boost did not last.

“The flurry of activity data suggests that the industrial sector is helping to provide some offset to the consumer slowdown,” said Ruth Gregory of Capital Economics.

Fastest growth of 2017

Last week the Bank of England’s Monetary Policy Committee raised interest rates from 0.25 per cent to 0.5 per cent, the first increase in the cost of borrowing since July 2007, despite the fact that the economy has slowed considerably this year and considerable trepidation from many firms over Brexit.

Despite the positive news on industrial production and trade, a separate release from the ONS suggested the construction sector had a torrid September, with output contracting 1.6 per cent.

The overall UK economy is estimated by the ONS to have grown by 0.4 per cent, up from the 0.3 per cent rate in the second quarter.

Is austerity over? Economics editor Ben Chu explains.

The ONS had pencilled in a 1 per cent expansion in manufacturing, following an 0.3 per cent contraction in the second quarter. The latest monthly data is unlikely to change statisticians’ preliminary estimates for overall GDP growth.

The European Commission on Thursday cut its 2017 growth forecast for the UK to 1.5 per cent, and said it expects growth of just 1.3 per cent and 1.1 per cent in 2018 and 2019 due to the negative impact of Brexit on investment and consumer confidence.

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