A recent rise in manufacturing output failed to override a bad year for Britain's factories, according to official figures on Friday.
The Office for National Statistics said industrial production fell 1.9% in the year to the end of July dragged down by lacklustre output of machinery and equipment.
A decline in the production of steel and other metals dragged the manufacturing sector down by 0.7%, adding to falls in North Sea oil output that have hit the broader figures for several years.
Manufacturing grew in June and July, but this spurt of activity, largely down to a turnaround in machinery and steel production, was not enough to offset falls dating back to last year when the government's austerity policies were hitting consumer confidence and the euro crisis was at its height.
The recent rise in production has been welcomed by George Osborne as a sign that his economic policies are bearing fruit.
But he is likely to be dismayed by trade figures from the ONS showing that the UK's recent growth has pulled in a record volume of imports and more than doubled the trade deficit to £3.1bn.
Imports rose to £104.2bn in the three months to July, a 3.1% increase, while exports to the EU remained flat and the trade in goods to countries outside the bloc fell sharply.
David Kern, chief economist at the British Chambers of Commerce (BCC), said the figures showed manufacturers still faced a challenge to recover from the financial crash, despite a "respectable" increase of 0.9% compared with the previous three months.
"Longer-term comparisons highlight the challenges facing manufacturing. Output is still some 10% below its pre-recession level, and export markets for UK manufacturers may be volatile in the months ahead.
Nevertheless, many manufacturing firms have demonstrated resilience during the recession, and many have successfully moved into new markets. Importantly, many have preserved their skills, and if the government adopts supportive measures to boost growth, there is scope for gradual expansion in the years ahead."
Rob Wood, UK economist at Berenberg Bank, said it was clear from the manufacturing figures that the UK consumer was driving demand. Most of the rise in sales has been domestic, rather than through exports in recent months.
He said: "The trade figures were disappointing, with the trade deficit widening to its highest since October last year as exports fell sharply. "The total deficit was £3.1bn, well above consensus expectations of £1.7bn.
As with industrial production, the trade data are extremely volatile. A substantial part of the 16% fall in goods export volumes to the non-EU this month will almost certainly be reversed in August.
"The trade deficit should gradually improve as eurozone growth improves and the US powers ahead in the second half of the year. "Better export prospects should help get firms off the sidelines and investing in the UK.
But full-scale rebalancing this is not. The domestic strength will drag in more imports so the UK will not be able to rely on strong contributions from net exports to power the recovery. The consumer is driving the UK recovery for now."
theguardian.com
The Office for National Statistics said industrial production fell 1.9% in the year to the end of July dragged down by lacklustre output of machinery and equipment.
A decline in the production of steel and other metals dragged the manufacturing sector down by 0.7%, adding to falls in North Sea oil output that have hit the broader figures for several years.
Manufacturing grew in June and July, but this spurt of activity, largely down to a turnaround in machinery and steel production, was not enough to offset falls dating back to last year when the government's austerity policies were hitting consumer confidence and the euro crisis was at its height.
The recent rise in production has been welcomed by George Osborne as a sign that his economic policies are bearing fruit.
But he is likely to be dismayed by trade figures from the ONS showing that the UK's recent growth has pulled in a record volume of imports and more than doubled the trade deficit to £3.1bn.
Imports rose to £104.2bn in the three months to July, a 3.1% increase, while exports to the EU remained flat and the trade in goods to countries outside the bloc fell sharply.
David Kern, chief economist at the British Chambers of Commerce (BCC), said the figures showed manufacturers still faced a challenge to recover from the financial crash, despite a "respectable" increase of 0.9% compared with the previous three months.
"Longer-term comparisons highlight the challenges facing manufacturing. Output is still some 10% below its pre-recession level, and export markets for UK manufacturers may be volatile in the months ahead.
Nevertheless, many manufacturing firms have demonstrated resilience during the recession, and many have successfully moved into new markets. Importantly, many have preserved their skills, and if the government adopts supportive measures to boost growth, there is scope for gradual expansion in the years ahead."
Rob Wood, UK economist at Berenberg Bank, said it was clear from the manufacturing figures that the UK consumer was driving demand. Most of the rise in sales has been domestic, rather than through exports in recent months.
He said: "The trade figures were disappointing, with the trade deficit widening to its highest since October last year as exports fell sharply. "The total deficit was £3.1bn, well above consensus expectations of £1.7bn.
As with industrial production, the trade data are extremely volatile. A substantial part of the 16% fall in goods export volumes to the non-EU this month will almost certainly be reversed in August.
"The trade deficit should gradually improve as eurozone growth improves and the US powers ahead in the second half of the year. "Better export prospects should help get firms off the sidelines and investing in the UK.
But full-scale rebalancing this is not. The domestic strength will drag in more imports so the UK will not be able to rely on strong contributions from net exports to power the recovery. The consumer is driving the UK recovery for now."
theguardian.com
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