Misfiring factories drag UK economic growth to six-month low
UK gross domestic product growth slowed towards the end of last year as the contraction of the industrial sector deepened, official figures confirmed on Friday.
Economic growth slowed to 0.3% for the three months to November a report from the Office for National Statistics revealed, as GDP grew 0.2% month-on-month in November. The market had expected growth of 0.1% for the month and 0.3% for the three-month period.
GDP growth was down from the 0.4% in the three months to October, 0.6% in the period to September and the lowest in six months.
Factory output unexpectedly fell by 0.4% month-on-month in November and was down 1.5% year on year. Economists had forecast a 0.2% increase after falling for four months in a row.
Manufacturing production was down 0.3% on the month and down 1.1% on the previous year, both much worse than expected and the sector’s worst losing run since the financial crisis.
While factory numbers were disappointing, Black Friday boosted output in the retail sector to 1.4%, while there was a 0.3% month-to-month increase in services output and 0.6% increase in construction output.
"There are two factors at work here," said Ben Brettell, senior economist at Hargreaves Lansdown. "The global economy looks to be stuttering, with the ‘Chimerica’ trade war rumbling on, and Chinese consumer spending on a downward trend. UK companies are also dealing with a significant Brexit headwind, with heightened levels of uncertainty putting business off investment and damaging consumer confidence."
Economist Sam Tombs at Pantheon Macroeconomics said the deeper downturn in the industrial sector is than surveys had indicated "underlines that the UK no longer can rely on steady growth in overseas demand to offset any Brexit-induced weakness".
All told, he expects quarter-on-quarter GDP growth to slow of 0.2% in the fourth quarter, from 0.5% in the third.