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UK Industrial Output Growth Tops Expectations; Trade Deficit Widens

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UK industrial production grew more than expected in June on higher oil and gas output, while the visible trade gap widened to a nine-month high, data from the Office for National Statistics revealed Thursday.

Industrial output expanded 0.5 percent on a monthly basis, after staying flat in May. Output was forecast to grow 0.1 percent. This was also the fastest growth seen so far this year.

The monthly growth was mainly driven by a 4.1 percent rise in mining and quarrying as oil and gas production were higher following an absence of maintenance that usually takes place in June.

Manufacturing remained flat in June, in line with expectations, after falling 0.1 percent a month ago. The largest downward contribution came from car production, which declined 3.6 percent.

On a yearly basis, industrial production grew 0.3 percent, reversing a 0.2 percent fall in May. At the same time, growth in manufacturing doubled to 0.6 percent from 0.3 percent.

In a separate communique, the ONS said construction output fell for the third consecutive month in June. Output dropped 0.1 percent from May. Nonetheless, output grew 0.9 percent annually.

Trade in goods resulted in a shortfall of GBP 12.72 billion in June compared to GBP 11.31 billion deficit in May, official data showed today.

This was the largest shortfall since September 2016. Economists had forecast the deficit to narrow to GBP 11 billion.

Exports of goods decreased 2.8 percent, while imports of goods grew 1.6 percent.

The trade deficit with EU nations increased to GBP 8.25 billion from GBP 7.8 billion. Likewise, the deficit with non-EU countries rose to GBP 4.47 billion from GBP 3.49 billion.

Including goods and services, the total trade deficit widened to GBP 4.56 billion from GBP 2.52 billion a month ago.

Looking ahead, Paul Hollingsworth, an economist at Capital Economics, said surveys suggest that the manufacturing sector should gain some momentum in third quarter, while export growth should pick up further.

As a result, the economist expects growth to hold up fairly well in the second half of the year, rather than slow.

by RTT Staff Writer

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