UK Factory Output Growth Slows Down to 0.1% in August

Growth in UK factory output came to a standstill in August in the latest sign of slowing economic recovery in the second half of the year.

Manufacturing output increased by just 0.1% over the month according to the Office for National Statistics (ONS), further frustrating government ambitions of rebalancing the economy away from consumer spending and towards production and exports.

It compared with a 0.3% increase in July. The manufacture of metals, wood and paper were among the drivers of August’s modest growth.

UK manufacturing has yet to fully recover from the blow dealt by the financial crisis, with the sector 4.4% below its 2008 peak.

Rob Wood, chief UK economist at the German bank Berenberg, said, indirectly, the tensions between Russia and the west over Ukraine were having an impact on the sector.

“UK manufacturing is entering a soft patch as the fallout from events in Ukraine spreads. Ukraine and Russia are of little direct importance to UK exporters. But the manufacturing cycle is highly integrated across countries. That means the decline in business confidence and German manufacturing output triggered by Russia’s aggression in eastern Ukraine will continue to spread to the UK over the second half of the year.”

Wood forecast economic growth of 0.6% in the third quarter, following 0.9% in the second. The first official estimate will be published by the ONS on 24 October.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza