Economic Update: Manufacturing At Its Best
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
In November, the UK Manufacturing sector delivered its seventh consecutive month of output growth, expanding by 0.4% in November. Manufacturing is one of the key sectors contributing to total industrial production.
As can been from the table, manufacturing’s weighting of 72% matters a great deal. Other sectors making a contribution, such as the increase in energy consumption, helped offset the deterioration experienced in mining. Some argue that warm weather experienced in October was overtaken by a much colder than normal November and that this was a key factor driving higher electric and gas demand.
Source: Office of National Statistics
Strong UK manufacturing output is being supported by synchronised global economic growth and, more importantly, the competitiveness of sterling against other currencies. Despite US dollar weakness in 2017, the pound continued to depreciate against the euro (-4.0% in 2017). This is making it more attractive for Europeans to purchase UK goods which accounts for almost half of British exports.
Capital economics, a leading independent macro-economic research company, report that UK companies are actually very positive on long-term growth despite Brexit uncertainty. They say businesses are looking to invest and expand their production capacity. If the expected trajectory comes to fruition, industrial exports may continue to lift the pace of economic growth for the year ahead helping move the economy away from its dependence on services.