Belfast Telegraph

Deficit rise a blow to economic upturn hopes

Hopes for a broad economic upturn were dented as figures showed a worsening decline in manufacturing output in May while the UK's trade deficit rose.

Factory production fell 0.8% on the previous month following a 0.2% decline in April, the Office for National Statistics (ONS) said, while in a separate announcement it said the trade deficit in goods increased to £8.5bn. The disappointing figures indicated that the UK recovery remains largely reliant on the dominant services sector, economists said, though construction could also contribute.

The survey paints a different story to that portrayed by the Ulster Bank purchase managers' index for June, which revealed the first increase in construction and manufacturing orders in Northern Ireland since 2007.

According to the report, new business increased, with companies saying that clients were growing in confidence.

The ONS survey said manufacturing over the latest three months was still 0.3% up on the previous quarter.

It was down 2.9% on the same period last year though the ONS cautioned that comparison may have been skewed by a change in bank holiday dates in 2012.

Data showed manufacturing in May was hit by falls in pharmaceuticals and metal products while there were increases for food, drink and tobacco, and chemicals.

Overall production in May was flat compared with the previous month but 2.3% down compared with the same period last year.

Meanwhile, trade figures showed an £8.5bn deficit on goods, up from £8.4bn in April. The overall deficit was £2.4bn, up from £2.1bn. This took into account a £6.1bn surplus in services, a fall from £6.4bn in April.

Belfast Telegraph