UK industrial output records strongest quarter since 1999 before Brexit vote
LONDON – British industrial output grew at the fastest rate since 1999 in the second quarter of this year, with “very few” respondents reporting an impact from uncertainty around June 23’s vote to leave the European Union.
However, official figures showed Britain’s trade deficit surged in June, with the economy sucking in a record amount of imports – including from the EU.
Industrial output rose 0.1 percent month-on-month in June – in line with economists’ forecasts in a Reuters poll – after a 0.6 percent drop in May, the Office for National Statistics said on Tuesday.
But looking at the second quarter as a whole, which gives a better sense of the underlying trend in what is often volatile data, industrial output rose surged by 2.1 percent in the three months to June, in line with an estimate in last month’s preliminary gross domestic product data.
This was the biggest gain for a calendar quarter since the third quarter of 1999.
“Any uncertainties in the run-up to the referendum seem to have had little impact on production, with very few respondents to our surveys reporting it as an issue,” ONS chief economist Joe Grice said.
A closely watched survey by financial data company Markit suggested output fell at the fastest rate since October 2012 in July as businesses reeled from the shock of the Brexit vote.
Some other measures have suggested a less steep decline, but last week the Bank of England cut interest rates for the first time since 2009 and restarted its quantitative easing programme in a bid to stave off recession.
Separate figures from the ONS on Tuesday showed that Britain’s trade deficit in goods widened in June to 12.409 billion pounds from May’s 11.526 billion pounds, above economists’ forecasts of 10.0 billion and the highest since March last year.
Goods and services imports hit a record 48.928 billion pounds.
Sterling fell more than 10 percent against other currencies after June 23’s vote, potentially giving a boost to future exports and raising the cost of imported goods.
German trade data for June, released earlier on Tuesday, showed a rise in imports outstripped a modest gain in exports.
Soft industry orders and uncertainty generated by Britain’s vote in June to leave the EU are clouding the business outlook, meaning foreign trade, once Germany‘s growth engine, is unlikely to inject fresh dynamism into the economy. –Reuters