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Rise in manufacturing output for June 'half the rate forecast'

UK manufacturing output rose by only 0.3 per cent in June, half the forecast monthly rate of expansion, official figures have shown.

The figures, published yesterday by the Office for National Statistics, showed broader industrial production also increased by less than was expected.

Industrial production, which includes mining and quarrying, oil and gas extraction, and electricity, gas and water supply as well as manufacturing output, rose by 0.3 per cent in June.

The average forecast among economists had been that both industrial production and manufacturing output would have risen by 0.6 per cent in June.

Oil and gas extraction fell by 1.3 per cent month on month in June, the ONS figures showed. However, it was down only 0.6 per cent on the same month of last year.

The ONS highlighted a downward impact from oil and gas extraction on broader industrial production since around 2000, declaring: "This can be predominantly attributed to North Sea oil reserves becoming increasingly challenging to extract and ageing extraction equipment requiring extensive repairs and maintenance."

Manufacturing output rose 0.2 per cent quarter on quarter in the three months to June, the ONS said, with industrial production increasing by 0.3 per cent.

Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "A smaller-than-expected rebound in manufacturing output in June adds to signs that the sector has recently lost some momentum from robust levels at the start of this year. This is disappointing for hopes that UK growth can be broad-based on a sustained basis going forward and less dependent on [the] services sector. Of course, given its size, the services sector will always be the key growth driver."

Paul Hollingsworth, at consultancy Capital Economics, said: "June's industrial production figures confirmed the onus was even more on the services sector to keep the recovery chugging along in the second quarter."

But he noted the Chartered Institute of Purchasing and Supply's survey of July manufacturing remained consistent with quarterly growth in the output of this sector of about one per cent. And, while noting eurozone weakness, he cited a pick-up in the US and other key export markets.

He added: "We remain optimistic that the industrial recovery will regain some pace in the second half of this year."

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