Growth in manufacturing output slumped 1.3 per cent in May, the biggest decline since January 2013, according to official figures released yesterday (8 July), while the wider measure of industrial output also decreased over the month, falling by 0.7 per cent.
Manufacturing data and surveys so far this year have indicated strong growth, so the data from the Office for National Statistics (ONS) puzzled some analysts, one of whom described the results as a “heavy dose of reality”.
On a year-on-year basis, manufacturing output was up 3.7 per cent in May, down from April’s increase of 4.3 per cent, while annual growth in industrial output slowed to 2.3 per cent from 2.9 per cent. Meanwhile, the weak performance dragged down the wider industrial production measure, including mining and utilities.
However, the latest figures should not be a serious cause for concern, as, on an annual basis, industrial production continued to grow at a solid rate, as did output from the sector, and are unlikely to change the generally expected growth of GDP of one per cent in the second quarter.
In fact, the UK’s industrial production numbers are in line with weaker data in the sector from Germany and Japan in May, indicating that manufacturers continue to face a number of headwinds because of subdued external demand across Europe, which continues to weigh on export prospects.
The disappointing figures may have a bearing on when the Bank of England is likely to raise interest rates and could mean that nothing is done until early 2015, which was Governor Mark Carney’s first suggestion.
