Tuesday, the Office for National Statistics reported that the British manufacturing output grew for the second month in a row with a 0.9% rise in July. Economists were expecting the monthly growth to ease to 0.3% from a revised 0.6% in June.
Output increased in eight of the 13 sub-sectors and decreased in four sub-sectors with one sub-sector remaining flat in July. Transport equipment industries showed the most significant output growth of 3.8%, followed by chemical and man-made fibres industries with a 3.3% rise.
Despite decreases in utility as well as mining and quarrying sectors, industrial production recorded a monthly rise of 0.5% in July, slightly slower than the revised 0.6% growth seen in June. However, monthly growth was better than the consensus forecast of 0.2%. Mining and quarrying output decreased 1% with a decrease in oil and gas production, while energy supply output was down 0.2%.
Annually, manufacturing and industrial production declined 10.1% and 9.3%, respectively in July. Economists were looking for a 11.1% fall in manufacturing and a 10.1% drop in industrial output.
In the three months to July, manufacturing output slipped 11.4% from the same period of previous year and industrial output dropped 10.7%.
Driven by the car scrappage scheme, new car registrations rose 6% year-on-year to 67,006 units in August. The Society of Motor Manufacturers and Traders data showed that the increase in July was the first since April last year.
Commenting on the latest data, Chief Economist at the British Chambers of Commerce, David Kern said manufacturing output data supports the assessment that the third quarter of the year might show a return to economic growth. But, the early stages of upturn would be driven by a turnaround in stock levels, so it is important to retain the stimulus provided by quantitative easing.
The Bank of England is set to announce its interest rate decision on September 10. The central bank is widely expected to leave the interest rate untouched at a record low of 0.5% and to continue its GBP 175 billion asset purchase programme.
The British manufacturing sector shrunk in August, according to a monthly survey from the Chartered Institute of Purchasing and Supply and Markit Economics. The manufacturing PMI dropped to 49.7 in August from 50.2 in July.
A survey report by the manufacturers’ organization EEF and BDO Stoy Hayward on September 8 said a recovery in the UK manufacturing sector is likely to take some time to gain footing, due to continued uncertainty regarding the strength of the markets, and tighter credit conditions weighing on recovery prospects into the next year.
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