Business

UK manufacturing output growth slows in August

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UK manufacturing output rose 0.1% in August down from growth of 0.3% in July, according to official figures.

The Office for National Statistics (ONS) said part of the slowdown was down to carmakers undertaking seasonal maintenance for longer than usual.

Compared with a year earlier, output from manufacturing firms was up 3.9%.

The wider measure of industrial output - which includes energy production - was unchanged in August from the month before, ONS figures showed.

Energy production is typically weak in August when oil and gas output is disrupted by seasonal maintenance work in the North Sea.

Industrial output was up 2.5% in August compared with a year earlier.

"Year-on-year growth for manufacturing and total industrial output is satisfactory, but the more recent figures show clear signs of a slowdown," said David Kern, chief economist at the British Chambers of Commerce (BCC).

Eurozone weakness

The UK is on track to grow faster than other developed nations this year, but there have been suggestions that the rate of expansion has started to slow.

Last week, a survey of the manufacturing sector indicated that the sector grew at its slowest pace for 17 months in September as the weakness in the eurozone started to affect orders.

The level of manufacturing output is still 4.4% lower than its pre-crisis peak. In contrast, the service sector, which accounts for three quarters of the economy, is already above its pre-crisis level.

"Manufacturing exporters are facing many challenges in the face of weak demand in the eurozone and a sterling exchange rate, which has recorded net rises over the past year," said the BCC's Mr Kern.

Rates

There was further grim news from the eurozone earlier, when official figures showed that German industrial output fell by 4% in August from the month before - the biggest decline since early 2009.

The recovery in the UK economy has led to much speculation as to when the Bank of England will start to raise interest rates from the current record low of 0.5%.

The Bank's policymakers gather for their latest meeting this week, although analysts are not expecting them to announce any change in policy.

Most analysts expect the Bank to start raising rates in the first half of next year.

The latest research from the National Institute for Economic and Social Research (NIESR), published on Tuesday, said it expects the first rise in rates to be in February next year.

It said it thought the economy had grown at 3.1% between this September and last, but that there was enough spare capacity to delay for a few months.

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