Belfast Telegraph

Output up but hopes of recovery are dented

By John-Paul Ford Rojas

Britain's manufacturing sector limped back to growth in June as output rose by a smaller-than-expected 0.3% after going backwards in May, official figures showed today.

The meagre increase further dented hopes that the UK's factories were roaring back to life, and confirmed that the sector's quarterly performance was at its weakest since last year.

It also led to a call for the Bank of England's Monetary Policy Committee (MPC) not to "jump the gun" on hiking interest rates as members mull their latest decision to be announced tomorrow.

Analysts said the strength of the pound and the weakness of the eurozone economies could be holding back growth in manufacturing.

The data from the Office for National Statistics (ONS) showed that the sector grew by just 0.3% in June compared to the previous month.

In May, it had contracted by 1.3%.

In the wider production sector, which also includes sub-sectors such as mining and quarrying, water supply and sewerage, figures showed growth of just 0.3% in June.

The data confirmed an earlier ONS estimate that manufacturing grew by just 0.2% over the course of the second quarter.

June's figures showed that it was 1.9% up on last year but the sector remains 7.4% off its 2008 pre-recession level.

Separate surveys have suggested there was a further slowdown for manufacturing in July, despite good overall growth led by the UK's dominant services sector.

Scotiabank economist Alan Clarke said the strength of the pound "could be having a bit of a dampener" on manufacturing.

He added: "Furthermore, eurozone demand for our exports is still sluggish so it is hard to get too upbeat from here."

Paul Hollingsworth of Capital Economics said: "June's industrial production figures confirm that the onus remained on the services sector to keep the recovery chugging along in the second quarter."

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