UK manufacturing fell in June, dragging industrial production lower

 
Emma Haslett
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Transport equipment dragged manufacturing lower (Source: Getty)

The pound remained weaker against the dollar this morning, after official figures suggested the UK's industrial production had weakened in June.

The pound remained 0.3 per cent lower against the dollar, at $1.2967, after figures showed the UK's industrial production fell 0.4 per cent in the three months to June, largely thanks to a 0.6 per cent fall in manufacturing.

The manufacturing sector, which makes up the largest segment of the UK's industrials sector, was dragged lower by transport equipment, which fell 2.2 per cent in the quarter.

However, on a monthly basis the figure rose, with total production rising 0.5 per cent in June compared with May, partly thanks to a 4.1 per cent rise in the mining and quarrying sector, spurred by higher oil and gas production, while manufacturing rose 0.1 per cent.

Puzzlingly, the figures contradicted a purchasing managers' index (PMI) published earlier this month, which suggested output in the manufacturing sector jumped in July, while another closely-watched survey showed the sector is poised to push business output back into growth.

Read more: British manufacturing production grows at fastest pace since 1995

Analysts were fairly sanguine about the figures.

"Brexit pressures are still weighing on Mr Carney as exemplified in his recent Bank of England Minutes last week, but some solace should be taken as many PMI and Output figures are holding strong, recording figures higher than economists forecast," said Alex Lydall, head of dealing at Foenix Partners.

"Markets are aware negotiations are thus far negligible for the UK’s exit and growth will be lower than hoped this year and perhaps next, but the direct impact is not as severe as first feared."

Dennis de Jong, managing director at UFX.com, added: "UK manufacturing seems to be fairly robust as it takes advantage of increased export demand.

“With potentially rocky Brexit negotiations on the way, the sector will be looking to further cement its position as the leading light of the UK economy.

“It has been a dour summer so far, and a troubled few months in Westminster have seen the Prime Minister lose her sunny disposition. This morning’s numbers may have given her slight hope that at least some things are on the right track.”

Read more: Retailers and film industry deliver 0.3 per cent British GDP expansion

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