United Kingdom industrial production, construction output and trade performed poorly in May

Posted July 09, 2017

The signs of continued weak growth came as businesses pressed British Prime Minister Theresa May and her government to negotiate a smooth Brexit in two years' time, saying an abrupt departure would deter investment.

The latest data from the Office for National Statistics recorded output of £11.43bn in May, down from £11.56bn in April and marking the lowest volume since August 2016.

An employers group said on Thursday that Britain should stay in the EU's single market for a transition period.

Industrial and construction output figures for May point to UK GDP growth of just 0.3 per cent in Q2, a slight improvement on 0.2 per cent in the first quarter.

There was weakness in the pharmaceutical sector on the month and energy output also declined due to warmer weather conditions.

Peter Dixon, an economist at Commerzbank, was quoted by the BBC as saying: "It's all building up a pattern here that says the economy is clearly losing momentum".

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Howard Archer, chief economic advisor to the EY ITEM Club, said it was "virtually certain" that construction and manufacturing dragged down economic growth in the second quarter.

The strength of next Wednesday's official data on wages is now likely to be critical for BoE policymakers as they mull whether to raise interest rates from their record low 0.25 percent. It also reported a bigger than anticipated 1 billion-pound widening in the country's trade deficit to 3.1 billion pounds ($4 billion) in May and a surprise 1.2 percent monthly drop in construction output.

"Instead of a cliff edge, the United Kingdom needs a bridge to the new European Union deal", said Carolyn Fairbairn, director-general of the Confederation of British Industry.

The wider measure of industrial output fell 0.1% following a 0.2% rise in April.

Separate data from the ONS showed that the UK's trade deficit widened in May.

The ONS figures add to other gloomy data released yesterday showing slower rates of expansion across manufacturing, services and construction - with the weakest rate of growth seen in the services sector, as weaker consumer spending had an impact.