British manufacturing records first "significant" production growth of 2017

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Signs of life in British manufacturing? (Source: Getty)

The UK's manufacturing industry recorded its first "significant" month of growth this year in July as production expanded by 0.5 per cent, new figures released today reveal.

A sharp 13.7 per cent rise in car production during the month was behind the increase, according to the Office for National Statistics (ONS). That was the fastest rise recorded in official data on the car industry since March 2009, with new models contributing to the growth.

The figures provide the first signs of a pick-up for British industry, after production slumped by 0.3 per cent over the second quarter of 2017, according to the ONS's GDP estimates. Some economists had expected the devaluation of sterling to prompt a manufacturing renaissance, which has so far been absent.

Overall industrial production rose by 0.3 per cent in the three months to July, with a 2.2 per cent increase in mining and quarrying explaining the rise.

In a statement, the ONS said: "Manufacturing remains relatively subdued since the start of the year, though July showed the first significant monthly growth of 2017, with car production increasing partly thanks to new models rolling off the production lines."

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Economists have struggled to explain the UK's weak manufacturing output, despite survey data regularly pointing to production levels much higher than the ONS data shows.

The Confederation of British Industry's industrial trends survey portrays the manufacturing sector in vibrant form, with exporters in particular benefiting from a weaker pound.

Meanwhile the purchasing managers' index for the manufacturing sector shows the sector at its strongest since April, which was the fastest expansion in the sector since mid-2014.

Chris Williamson, chief business economist at IHS Markit, which produces the PMIs, said: "The data bring the official data more into line with recent upbeat business surveys.

"The stronger official data therefore add some relief to worries that the official data were showing the sector facing another downturn despite the weakened pound."

Lee Hopley, chief economist at EEF, the manufacturers’ organisation, said: “Today’s data finally shows some alignment with the positive survey indicators for manufacturing over the past few months."

However, the volatility in some sectors, such as automotive and pharmaceuticals, is "providing some challenge" in gaining an accurate reading on the sector, Hopley added.

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