Tuesday 8 November 2016 9:59 am

UK industrial production fell unexpectedly in September - but manufacturing rose

The UK's industrial production fell in September, despite economists expecting it to be flat – but manufacturing showed a rather rosier picture.

Industrial production fell 0.4 per cent between August and September, the same fall as the month before.

Year on year, the figure rose 0.3 per cent cent – although economists had hoped for a 0.8 per cent rise – while on a quarterly basis, it fell 0.5 per cent.

The Office for National Statistics (ONS) said the biggest downward pressure came from the manufacturing industry, which fell 0.9 per cent in the quarter. That was partially offset by a 4.3 per cent rise in mining and quarrying. 

But then the month-on-month rise in manufacturing output in September was 0.6 per cent, far more encouraging than the 0.4 per cent economists had expected. Even the year on year figure was positive – a 0.2 per cent rise, against expectations of a 0.1 per cent fall.

Confused? Some guidance might be provided by the monthly purchasing managers' index, which suggested although growth in the sector fell in the immediate aftermath of the EU referendum, it quickly began to benefit from the weak pound. Here's what it looked like in September (any figure above 50 denotes growth):

Today Kate Davies, senior statistician at the ONS, pointed to widespread summer maintenance shutdowns, which hampering production more than usual.

“There are no obvious signs so far of either the weaker pound or post-referendum uncertainties affecting the output of UK factories, which continued broadly in line with recent trends.”

"September’s fall in industrial production primarily reflects volatility in oil production and the dampening impact of unusually warm weather on heating demand.

"Mining and quarrying output fell 3.8 per cent month-to-month in September… This reflected the further unwinding of a 6.8 per cent jump in production in July; usual summer maintenance at North Sea oil rigs has occurred later than usual this year," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics. 

"In addition, output in the energy supply sector fell 1.9 per cent month-to-month… because average temperatures were two degrees celsius above their 1970 to 2015 average in September.

"These falls fully offset a solid 0.6 per cent month-to-month rise in manufacturing output, in line with the recent improvement signalled by surveys."