UK manufacturing beats expectations

Manufacturing output increased by 0.4% over September, according to Office for National Statistics

Manufacturing is adding more to the economy, and doing better, than experts and economists thought in new figures released. Britain’s economic upturn continued to move along, despite international problems and the uncertainty over the Scottish referendum. Though there are warning signs a slowdown could be approaching.

Manufacturing output increased by 0.4% over the month according to the Office for National Statistics, beating city expectations of a 0.3% rise. The biggest contributor to growth was car production, but computer, electronic and chemical manufacturing were also drivers.

The annual rate of growth slowed to 2.9% in September from 3.9% in August.

Despite the increase in output in September, economists said growth in the sector, and the wider economy, was gradually slowing. Manufacturing output increased by 0.4% in the third quarter, compared with 0.5% in the second quarter and 1.5% in the first.

Manufacturing is still hovering about 4% below its pre-recession peak, and overall production 9.5% below, indicating the sector has some way to go in its recovery, while the service sector is now well above its pre-recession peak.

David Kern, chief economist at the British Chambers of Commerce, said: “While year-on-year growth for manufacturing is still satisfactory, there is a clear slowdown in the pace of growth both quarterly and year-on-year. This provides further confirmation that expansion of the UK economy has gradually eased in recent quarters.”

The report also showed that industrial production rose by a seasonally adjusted 0.6% in September, compared to expectations for a 0.4% gain, after falling 0.1% in August.

As expected, the Bank of England’s Monetary Policy Committee decided on Thursday to leave interest rates on hold at their record low of 0.5%.

The UK economy continues to be one of paradoxes, with many numbers contradicting one another; unemployment remaining stubbornly high and yet a record number of people also in work; record growth in some sectors but consistent falls or sluggish growth in others.

Lee Hopley, chief economist at EEF, said that, while survey evidence suggested manufacturing would continue to grow in the final months of 2014, the fact that most of the good results are coming from sectors such as transport, food and chemicals adds “to the evidence that domestic demand is playing a big role in driving output growth”.

Separate data from the Society of Motor Manufacturers and Traders also showed a upswing in new car sales, with registrations jumping 14.2% in October to 179,714 units. This took the total number of cars listed this year to more than 2m for the first time since 2007.