Industrial output shrank more than expected and the trade deficit widened in March in the latest signs that uncertainty surrounding Brexit is beginning to weigh on the economy.
Industrial output dropped by 0.5% in March, sharper than the 0.3% fall predicted by economists. It followed a 0.7% fall in February and brought the sector to a virtual standstill in the first quarter overall, with growth of just 0.1%, according to the Office for National Statistics figures.
Production was dragged lower as warmer-than-average temperatures led to a 4.2% fall in energy supply, and manufacturing also fell unexpectedly by 0.6%.
Economists said the weak data made it unlikely that the ONS would revise up its first estimate of growth for the first quarter overall, when the economy grew by a weaker-than-expected 0.3%.Howard Archer, the chief UK economist at IHS Markit, said it was “a ropey set of March data for the UK economy that point to a poor end to a disappointing first quarter”.The broad services and goods deficit jumped to £4.9bn in March from £2.6bn in February. Meanwhile, the trade in goods deficit widened to £13.4bn, more than the £11.8bn economists had been expecting.
The figures suggested the sharp fall in the value of the pound since the Brexit vote did little to boost exports in March, despite making British goods cheaper abroad.
Instead there was a surge in imports, up £2.9bn over the month, with an increase in imports of goods from both EU and non-EU countries.
The main drivers were greater volumes of imported machinery and transport equipment – mainly cars – as well as oils and chemicals. Exports increased by just £600m.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said the March trade figures were “simply dreadful”.
A 0.7% fall in construction output in March added to the raft of weaker-than-expected data and reinforced fears that the UK economy is facing a renewed slowdown, as uncertainty about the UK’s future relationship with the EU takes hold.
Source By theguardian….