October 7, 2014 / 8:37 AM / 5 years ago

UK factory output growth slows in August, auto shutdowns weigh

LONDON (Reuters) - British manufacturing growth slowed in August in month-on-month terms, official data showed on Tuesday, adding to signs of a cooling in the country’s economic recovery.

An employee works on a 2013 Mini at BMW's plant in Oxford, southern England November 18, 2013. REUTERS/Suzanne Plunkett

Output for manufacturing rose a monthly 0.1 percent in August, down from growth of 0.3 percent in July and in line with a consensus forecast in a Reuters poll of economists.

The Office for National Statistics attributed some of the slowdown to carmakers halting production lines for longer than usual for maintenance.

The less volatile measure of manufacturing in the three months to August was unchanged, compared with a fall of 0.4 percent in the three months to July.

Britain looks set to grow more strongly than any other big industrialised economy this year but the recovery has been largely reliant on consumer spending so far, raising questions about the long-term sustainability of the upturn.

On the year, output in the factory sector was up 3.9 percent, reflecting in part a weak month for the sector in August of last year.

Private sector surveys for September have shown a more accentuated slowing of growth in manufacturing last month on the back of weak demand from the struggling economies of the euro zone as well as a strengthening of sterling.

Data published earlier on Tuesday showed German industrial output in August suffered its biggest drop since the financial crisis.

Overall British industrial production was unchanged in August, again in line with a forecast in the Reuters poll.

Industrial output is typically weak in August when oil and gas extraction is often limited by maintenance work in the North Sea.

Output in the sector fell by 1.7 percent in August from July and was down 6.9 percent compared with the same month last year, reflecting a 25-day shutdown of the Buzzard field as well as other shutdowns, an ONS official said.

The Bank of England has said it wants to be sure the economy is on firm ground before it raises interest rates from a record low of 0.5 percent, something most economists think will happen in February or May of next year.

Manufacturing has further to go before it catches up from its deep slump after the 2008 financial crisis. Factory output is 4.4 percent below its peak, while Britain’s dominant services sector output is already well above its pre-crisis peak.

The data represented the first monthly reading of Britain’s manufacturing and industrial output based on new accounting methodology.

Reporting by William Schomberg and Sarah Young

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