Trade deficit also jumps to six month high
UK economic data for March released today is worse than forecast in the ONS growth estimates, diluting hopes that Q1 GDP could be revised up.
GDP fell to 0.3 per cent in Q1 compared to 0.7 per cent in the previous quarter, undershooting analysts’ expectations for 0.4 per cent growth, ONS figures released last month showed.
The ONS predicted industrial production rose 0.3 per cent quarter-on-quarter, with manufacturing output up 0.5 per cent. But figures released today showed those figures rose 0.1 per cent and 0.3 per cent respectively.
Howard Archer, chief economist for the UK and Europe at IHS Markit, says the manufacturing data for March is disappointing, especially as survey evidence had been more upbeat.
The trade deficit also jumped to a six month high with imports up 3.3 per cent quarter-on-quarter, while exports declined 0.5 per cent.
“This suggests that net trade was negative in the first quarter and weighed down on UK GDP in contrast to making a major positive contribution in the fourth quarter of 2017,” says Archer.
Weak sterling and firmer oil and commodity prices saw import prices rise 10.8 per cent year-on year and 1.4 per cent month-on-month.
However, Archer says that as industrial production only accounts for 14.6 per cent of GDP today’s figures in themselves do not indicate a downward revision to GDP growth.