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Manufacturing output bounced back in August to record 0.2% increase

Published 07/10/2016

Figures show manufacturing output rose 0.2% in August
Figures show manufacturing output rose 0.2% in August

Output in Britain's manufacturing industry rebounded in August despite a worse-than-expected performance from industrial production.

The Office for National Statistics (ONS) said manufacturing output rose 0.2% in August, after a sharp month-on-month contraction in July when activity fell by 0.9%.

The bounceback was driven by a 2.5% jump in the production of transport equipment over the period, swinging back to growth after sliding 1.6% in July.

However, industrial production took a turn for the worse, recording a drop of 0.4% in August, with economists having pencilled in a figure of 0.2%.

The decline was triggered in part by mining and quarrying output, which decreased month-on-month by 3.7% over the period.

The ONS said production and manufacturing rose 0.7% and 0.5% in August compared to the same month a year ago.

Kate Davies, ONS senior statistician, said: "Manufacturing output was up slightly in August with more cars built, with limited evidence suggesting the lower pound boosted exports.

"Nevertheless, this was offset by a fall in oil and gas production, with some field shutdowns contributing to the fall, meaning UK production as a whole was down."

Closely watched purchasing managers' surveys for the manufacturing sector have shown a bounce back since activity dropped sharply in the first month after Britain voted to leave the European Union.

Activity hit 55.4 last month, up from 53.4 in August, and above economist expectations of 52.1.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said industrial production was likely to fall even further in September.

"The owner of the Buzzard oil field, which accounts for 12% of total oil production, moved a scheduled shutdown to September from July.

"In addition, the unusually mild weather in September - the average temperature was two degrees above its long-run average - will greatly depress demand for heating energy."

Howard Archer, chief UK and European economist at IHS Markit, said: "It now looks likely that industrial production fell overall in the third quarter and weighed down on GDP growth.

"Indeed, industrial production would have to have increased 1.1% month-on-month in September just to have been flat over the third quarter.

"It does need to be remembered though that industrial production and manufacturing output can be particularly volatile from month to month during the third quarter due to the timing of manufacturing plant shutdowns because of summer holidays and also the timing of maintenance work on North Sea oil and gas platforms."

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