U.K. Factory Output Surges as Brexit Pound Impact DownplayedBy
Industrial production falls 0.4% on oil, gas extraction
Decline in third-quarter production is revised to 0.5%
U.K. manufacturing surged the most in five months in September, led by repair and maintenance of transport equipment including ships and machinery.
The advance of 0.6 percent, exceeding forecasts for a 0.4 percent increase, indicates some strength in factories at the end of the third quarter. Still, weakness at the start of the period meant that manufacturing dropped 0.9 percent over the three months.
While the pound’s 16 percent depreciation since the Brexit vote in June has been cited as a benefit to manufacturing, the Office for National Statistics said it hasn’t seen direct evidence of an impact.
Manufacturing is performing “broadly in line with recent trends,”said senior statistician Kate Davies. “There are no obvious signs so far of either the weaker pound or post-referendum uncertainties affecting the output of U.K. factories.”
Total industrial production dropped 0.4 percent, as continued maintenance at North Sea oilfields dragged oil and gas extraction down 4.5 percent, the ONS said in London. It also revised its estimate for third-quarter industrial output to a larger 0.5 percent decline, compared with 0.4 percent in last month’s GDP data. That report also showed the economy grew a better-than-expected 0.5 percent in the quarter, led by the services sector.
The economy’s resilience since the vote has surprised many. The Bank of England acknowledged the strength last week, highlighting consumer spending in particular and also noting that business investment had been “somewhat less soft” than expected.
From a year earlier, manufacturing rose 0.2 percent in September, while total production increased 0.3 percent, the least since March.
IHS Markit said this month that U.K. industry has been helped by the pound’s depreciation. Its latest Purchasing Managers Index said that export orders rose at a “robust” pace in October.
— With assistance by Mark Evans, and Lucy Meakin