Output rises as UK trade gap narrows

OVERALL production output grew in line with expectations in September but manufacturing growth was weaker than expected, suggesting that the UK economy’s rebound could be beginning to slow.

Manufacturing output grew by only 0.1 per cent month on month in September, down from 0.4 per cent in August, according to figures from the Office for National Statistics (ONS) published yesterday.

But it said total manufacturing output was still 4.8 per cent higher than a year earlier.

Overall industrial output growth was unchanged from August at 0.4 per cent, although it was 3.8 per cent higher than a year earlier as mining, utility and energy industries all picked up.

Output in the mining and quarrying sectors increased by 2.2 per cent in September compared to a year ago, increasing by 1.3 per cent on the previous month.

Meanwhile, oil and gas extraction increased by 1.7 per cent on the previous year and 0.9 per cent on August.

Separate figures from the ONS showed Britain’s trade deficit narrowed to a four-month low, falling to £4.6bn in September, compared with a revised trade gap of £4.9bn in August – the highest figure for five years.

Exports rose by £0.5bn and imports rose by £0.2bn.

The UK’s trade gap with its biggest trading partner, the European Union (EU), also narrowed to £3.6bn in September, compared with a deficit of £3.8bn in August. Exports and imports cancelled each other out with exports rising by £0.1bn while imports fell by £0.1bn.

Alan Clarke, economist at BNP?Paribas, said he believed the data signalled a period of sluggish economic growth but said the figures were more promising than previously.

“Manufacturing growth at 0.1 per cent is pretty sluggish. But I don’t think we’re going to fall into negative territory, we are just not going to expand as quickly as we were,” he said. “I did forecast negative growth for 2011. But now I think we will be bobbing along the bottom so I’m a little more optimistic. I expect one per cent GDP growth for next year,” he added.