Britain’s industrial output rose for the first time in three months in November according to official figures, raising some hopes the sector will impose a less than expected drag on economic growth at the end of the year.
November’s 2.1 per cent rise in industrial production – which accounts for around 15 per cent of UK GDP – was far better than the 1 per cent forecast by analysts ahead of the release.
The climb comes after industrial output fell by 1.1 per cent in October (revised up from an initial -1.3 per cent) – a drop that led economists to forecast the sector would impose a net drag on GDP after the UK economy expanded by 0.6 per cent in the third quarter.
Monthly industrial output was pushed up by an acceleration in mining and quarrying in November, said the Office for National Statistics, which noted the end of the traditional maintenance period in the country’s oil and gas sector.
“Production saw significant growth, mainly down to increased oil & gas output as the Buzzard field came back online along with a boost from the volatile pharmaceuticals industry”, said Kate Davies at the ONS.
Within the index, manufacturing output also rose better than expected at 1.3 per cent month on month, after October’s 0.9 per cent contraction.
A falling pound is likely to have boosted manufacturing competitiveness, said James Knightley at ING, who thinks overall industry will “make a decent contribution to fourth quarter GDP”.
On a year on year measure, industrial production was 2 per cent stronger and manufacturing 1.2 per cent better compared to November 2015.
Despite the improving indicators, “it will remain up to the services sector to drive overall GDP growth” said Paul Hollingsworth at Capital Economics.
Most economists are forecasting a slight moderation in quarterly UK growth at the end of 2016.
Chart via Bloomberg