Britain’s manufacturing sector lies in ruins

REUTERS/Mohamed Abd El Ghany

UK manufacturing production data came in far below expectations in February, and is signalling worrying times for manufacturing in the country.

According to the latest figures from the Office of National Statistics, released on Friday, manufacturing production fell by 1.1% in February, the most recent data period. That’s down from growth of 0.7% in January.

The consensus forecast of economists for February was for a much smaller fall of just 0.2%.

On a year-on-year basis manufacturing also fell a lot more steeply than expected. It fell by 1.8% against an expected 0.7%.

Industrial production was not much better, falling 0.5% year-on-year and 0.3% month-on-month. That came against forecasts of a flat figure of 0% growth, and a 0.1% gain.

Here’s the ONS’ chart:

ONS

The figures suggest that January’s data, released at the start of March, was something of a blip, as an “unusually warm spell in January meant that demand for heating was lower than usual” according to Pantheon Macroeconomics.

Manufacturing production grew by 0.7% month-on-month in January 2016, beating analysts’ estimates of a 0.2% rise. This gave some hope that Britain’s manufacturing sector, which has been in the doldrums of late, was recovering, but that looks to have been misplaced.

The data adds to an increasingly gloomy picture for the UK’s economy. On Tuesday, statistics from Markit and the CIPS showed that Britain’s services sector — the dominant sector of the economy — just had its worst quarter since the end of 2012. Worse still, as Pantheon argues “surveys point to a deepening of the slump in manufacturing ahead.” Here’s the chart:

Pantheon Macroeconomics

There are also huge fears about the potentially imminent collapse of the Welsh steel industry, unless a buyer can be found at the Tata Steel plant in Port Talbot.