Wednesday 11 January 2017

Oil And Pharma Drives Growth In UK Industrial Production

Industrial Production

Activity in Britain’s factories, chemical plants and oilfields increased faster than expected in November, according to official figures from the Office for National Statistics.

Industrial production grew by 2.1 per cent in November compared with the previous month. Analysts were expecting growth of 1 per cent.

Manufacturing, which accounts for 70 per cent of Britain’s industry, grew by 1.3 per cent, partly because of very high growth in pharmaceuticals, which the ONS says “can be highly erratic”.

The ONS also reported figures showing that the UK’s trade deficit widened in November, as a rally in sterling helped reverse some of the rise in the cost of imports a month earlier.

The value of goods imported into the UK exceeded the value of those exported by £4.2bn in November, a widening of £2.6bn from October. This was a larger deterioration than forecasters had been expecting. There was particularly strong growth in imports of manufactured and semi-manufactured goods.

Wednesday’s data release follows an unexpected decline in industrial production in October of 1.1 per cent compared with September, partly because of one-off factors including the temporary shutdown of the Buzzard oilfield.

Activities related to crude petroleum and natural gas accounted for just under half the growth in the index, as the oilfield was switched back on.

This means 1.6 percentage points of the 2.1 per cent growth in November was due to just two sectors — pharmaceuticals and oil.

Compared with the same month in 2015, industrial production grew by 2 per cent. The annual change was much more broad-based than the monthly change with growth coming from pharmaceuticals and the water and gas industry.

Other figures also published by the ONS on Tuesday showed output in the construction industry fell by 0.2 per cent in November compared with October. This was mainly driven by a fall in “non-housing repair and maintenance”.

Construction figures are notoriously volatile. In October the official data found activity had fallen by 0.9 per cent compared with the previous month.

Wednesday’s figures follow recent surveys of purchasing managers in construction and manufacturing that pointed to strong growth during the final month of 2016.

The figures add to a debate about the strength of the British economy immediately following the referendum on membership of the EU. Most data suggest that increased uncertainty has not led to a slowdown.

However, economists and investors remain pessimistic about the long-term impact on growth if leaving the EU leads to a reduction in Britain’s ability to trade and threatens its status as Europe’s financial services hub.

<>On Monday, the pound fell to its lowest level against the dollar since October after comments from Theresa May, the prime minister, were interpreted as ruling out the possibility of continued membership of the single market.



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