Upbeat growth forecasts for the second half of the year have been dealt a blow after official figures showed industrial output fell unexpectedly in August.
The country’s industrial output dropped by 1.1 per cent on July, which is the largest drop since September 2012, as factories cut production. August also saw a fall in industrial output, which was driven by a sharp decline in manufacturing output. It fell by 1.2 per cent on the month. Firms in the basic pharmaceuticals, food and beverage, and electronics sectors all saw declines.
A number of economists were predicting strong GDP growth this year in the wake of positive economic surveys, especially over the last six months. Surveys conducted with manufacturing and construction businesses have shown higher output and orders, and the service sector has grown month on month since last autumn.
The National Institute of Economics and Social Research released a very upbeat report in which it said that the latest manufacturing figures “would only dent” the increase in GDP in the three months ending in September. The Institute estimates it was 0.8 per cent higher than in the previous quarter.
Chris Williamson, the chief UK economist at Markit, has said that the latest figures are only a temporary blip in an otherwise strengthening economy. The underlying trend in production growth is the strongest since the mid-point of 2010, and he predicts that there will be improvement over the coming months.
The figures, when viewed in conjunction with the Office for National Statistics data for August, suggest the recovery may be not be as smooth as originally predicted.
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