British manufacturing output expanded for the sixth month in a row during October, the longest such run in at least 20 years, helped by the production of cars for export.
The data, released yesterday along with figures for construction and the trade balance, added to signs that British industry may be a bright spot in 2018, when most forecasters expect the economy will slow.
Britain’s economy has lost momentum this year as higher inflation caused by the fall in sterling after last year’s Brexit vote hurt consumers, although some exporters have gained from the weaker pound and the stronger eurozone economy.
Manufacturing output increased 0.1% in October from September, as expected in a Reuters poll of economists. “While manufacturing was relatively subdued overall in October despite record production of cars destined for export, the longer-term picture is one of strong growth,” ONS statistician Kate Davies said.
Annual growth in factory output hit 3.9% in October, as expected in the Reuters poll and marking the biggest increase since December 2016.
The outlook for British manufacturing, which accounts for 10% of economic output, hinges largely on the outcome of Britain’s divorce from the European Union.
The European Commission said earlier yesterday enough progress had been made in Brexit negotiations with Britain to allow a second phase of talks on future relations to begin, ending an impasse over the status of the Irish border.
Broader industrial output was flat on the month, as expected.
In annual terms, output was 3.6% higher in October, the strongest reading since December 2016.
Figures for the much bigger services sector are due to be released on December 22.
The Bank of England said last month that it expects the economy to grow by 0.4% in the last three months of the year, and to expand by 1.6% in 2018, after it raised its key interest rate for the first time since 2007.
A private-sector business survey last week suggested British manufacturers enjoyed strong growth in November but also rising inflation pressure.
The official readings of manufacturing have tended to show a weaker picture for the sector than the surveys over 2017.
Separate ONS data again painted a mixed picture of Britain’s trade performance.
Although the ONS revised down the size of Britain’s trade deficit in the quarter, the figures showed the gap widened slightly in the month of October to £10.781bn from £10.453bn in September.
Economists polled by Reuters had expected a deficit of £11.45bn.
In volume terms, growth in exports outpaced that of imports during October. Britain’s export performance has looked average this year compared with other European economies, suggesting sterling’s sharp fall after last year’s Brexit vote has yet to provide a major boost to competitiveness.
The ONS also released figures for construction in October, which disappointed again.
Output dropped 1.7% on the month, following a 1.6% drop in October.
This was the largest fall since March 2016.
The Reuters poll had suggested construction output would rise 0.4%. However, new construction orders rose by a record amount in the third quarter, helped by the award of orders related to the new High Speed 2 rail project.
Employees push an Enviro 400 bus along the production line at the Alexander Dennis factory in Scarborough. The UK manufacturing output increased 0.1% in October from September, as expected in a Reuters poll of economists.
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