Factories motor ahead as construction sector struggles

Output in Britain's manufacturing industry grew at its fastest pace for a year in July, but the construction industry slumped and the trade gap failed to improve.

Production of new cars raced ahead in July. Picture: Anthony Devlin/PA

Figures from the Office for National Statistics (ONS) showed the manufacturing sector outstripped expectations to climb by 0.5 per cent in July, driven in part by the production of new cars.

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It came as the manufacturing of motor vehicles, trailers and semi trailers raced ahead during the period, expanding at the fastest rate since March 2009 at 13.7 per cent.

However, Britain’s deficit in goods and services, the gap between exports and imports, was static at £2.9 billion in July, while construction output sank for the fourth month in a row at 0.9 per cent in response to 1.4 per cent drop in new work.

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Kate Davies, ONS senior statistician, said: “Manufacturing remains relatively subdued since the start of the year, though July showed the first significant monthly growth of 2017, with car production increasing partly thanks to new models rolling off the production lines.

“The usual period of summer maintenance of North Sea oil platforms also failed to materialise for a second month running.”

• READ MORE: Car production and construction weigh on industrial output

She added: “Construction output fell for the fourth month in a row, with private housingbuilding contracting in July after a strong couple of months.”

Sterling was up 0.3 per cent to $1.313 following the announcement, while the pound was marginally off versus the euro at €1.088

Allan Callaghan, managing director of housebuilder Cruden Homes, said: “The construction sector as a whole has slowed up in recent months, with the effects of economic and political uncertainty, reduced government spending and the fallout from delayed Brexit decision-making.

“We’re seeing a continued demand for affordable, quality housing across Scotland and this is resulting, currently, in a good trading market for housebuilders. Social housing projects are still having a lengthy development period and there is no doubt that the current projects which started late are supporting this continued turnover but new projects need to come on stream within a shorter development period.”

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