Meagre industrial output points to further slowdown

Manufacturing output grew by just 0.2%. Picture: Andrew Milligan/PA Wire
Manufacturing output grew by just 0.2%. Picture: Andrew Milligan/PA Wire
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The scale of the economic challenge for the next government has been laid bare after official data showed Britain’s industrial output again fell short of expectations.

Figures from the Office for National Statistics (ONS) showed industrial output grew just 0.2 per cent in April, below consensus forecasts of 0.7 per cent.

Cruden Building & Renewals boss Allan Callaghan said the skills shortage remains a 'crucial challenge' for the construction sector. Picture: Contributed

Cruden Building & Renewals boss Allan Callaghan said the skills shortage remains a 'crucial challenge' for the construction sector. Picture: Contributed

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Output was down 0.8 per cent year-on-year and the poor performance, which follows three consecutive months of falling figures, was put down to lacklustre manufacturing growth, which grew by only 0.2 per cent.

Stronger energy production and factory output failed to make up for the sluggish manufacturing figures, which also missed forecasts and were flat year on year.

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Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “April’s modest rise in industrial production reverses only a tiny fraction of the 1.8 per cent fall between December and March and so will increase concerns that the overall economy is stagnating.”

Construction output also fell month-on-month in April, the ONS said, dropping 1.6 per cent month-on-month, driven by falls in both repair and maintenance and new work.

Allan Callaghan, managing director of homebuilder Cruden Building & Renewals, said: “A decrease in output figures is not entirely unexpected, given some of the wider economic and political uncertainty currently ongoing, however at Cruden we are still experiencing strong demand for housebuilding.

“However, whether or not output is rising, the ongoing skills shortage remains a crucial challenge and one that the industry and the government need to work together to address. Without skilled labour we cannot increase output to the levels needed to tackle issues such as the housing gap.”

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The figures point to a further slowdown in momentum for the UK economy following the country’s decision to quit the EU last year and come amid political turmoil after the shock general election result.

Tombs added: “Looking ahead, we expect manufacturing output to revive slowly, as moderate growth in exports offsets weakness in domestic demand. Even so, industrial production is on track to barely rise at all again in Q2, ensuring that overall GDP growth struggles to better Q1’s 0.2 per cent rise.”

In slightly better news, ONS data also showed that the UK’s overall trade deficit narrowed in April, standing at £2.1 billion versus £3.9bn the previous month.

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