Although the UK’s industrial and manufacturing output moved back into growth during June, the rise was smaller than expected and suggested that overall economic growth is still being dominated by the services sector.
According to the Office for National Statistics (ONS), industrial and manufacturing output rose by 0.3 per cent in June after decreasing by 1.3 per cent in May, while a survey by Markit last week showed that manufacturing grew at its slowest rate in a year in July. In fact, manufacturing grew by just 0.2 per cent over the whole of the second quarter, the ONS said.
However, the ONS also said that industrial output was up 1.2 per cent over the past 12 months, while manufacturing production grew by a more respectable 1.9 per cent.
The ONS was quick to point out, however, that the result would not affect wider economic growth, leaving gross domestic product (GDP) estimates for the second quarter at 0.8 per cent.
Despite these lower-than-anticipated figures, economists remain confident that the recovery will not lean so heavily on the services sector, which showed tremendous growth in July, according to Markit, in the second half of the year.
The results also led to a call for the Bank of England’s Monetary Policy Committee (MPC) not to “jump the gun” on raising interest rates at their monthly meeting culminating today (7 August), as the strength of the pound and the weakness of the Eurozone economies could be holding back growth in manufacturing.
A spokesman for the British Chambers of Commerce said that there are evidently still a number of uncertainties facing the economy, so it would be unwise of the MPC to raise interest rates too early.
