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Surprise drop in UK manufacturing output unlikely to derail recovery, says NIESR | Surprise drop in UK manufacturing output unlikely to derail recovery, says NIESR |
(about 14 hours later) | |
Britain's economic recovery accelerated in the second quarter despite a surprise fall in manufacturing output in May, according to a respected thinktank. | Britain's economic recovery accelerated in the second quarter despite a surprise fall in manufacturing output in May, according to a respected thinktank. |
The National Institute of Economic and Social Research (NIESR) said the unexpected drop in production would weigh "only marginally" on the wider economy, estimating a 0.9% rise in GDP between April and June, an improvement on the first quarter's 0.8% growth. | The National Institute of Economic and Social Research (NIESR) said the unexpected drop in production would weigh "only marginally" on the wider economy, estimating a 0.9% rise in GDP between April and June, an improvement on the first quarter's 0.8% growth. |
Simon Kirby of NIESR said: "We have to remember the manufacturing sector accounts for only 10% of the overall economy. In addition we expect the manufacturing sector to rebound in June, offsetting much of the drop in output in May." | Simon Kirby of NIESR said: "We have to remember the manufacturing sector accounts for only 10% of the overall economy. In addition we expect the manufacturing sector to rebound in June, offsetting much of the drop in output in May." |
The first official estimate of the second quarter will be published by the Office for National Statistics (ONS) on 25 July. | The first official estimate of the second quarter will be published by the Office for National Statistics (ONS) on 25 July. |
Economists were left baffled by the apparent slowdown in Britain's factories in May, when manufacturing output fell by 1.3%, defying City expectations of a 0.4% rise. It was the biggest drop in 16 months and marked the end of a five-month run of expansion – the longest since 2010. | |
The ONS said the decline was broad-based. Metals, pharmaceuticals, and electronics saw the biggest falls, which offset a rise in clothing manufacturing. | |
Economists suggested a "Goldilocks" period – where the UK economy is neither too hot nor too cold – could be coming to an end. Martin Beck of the EY Item Club said: "Weaker demand from overseas, as well as the headwinds presented by the strength of sterling … are likely to have contributed to the poor performance of the sector." | |