Setback as figures show sector output sluggish

Output for industry as a whole rose 0.3 per cent in June, lagging a forecast of 0.6 per cent in a poll of economists, and compared with a fall of 0.6 per cent in May.

The data added to signs that Britain’s economy is still being driven mostly by its massive services sector, again frustrating hopes for a more balanced recovery.

Yesterday’s figures took growth in industrial output in the second quarter to 0.3 per cent, slightly weaker than an estimate of 0.4 per cent which the Office for National Statistics used in its first estimate of economic growth in the period. The ONS said this did not change its earlier estimate of 0.8 per cent economic growth in the second quarter.

Electricity and gas made the strongest positive contribution to industrial production in the second quarter – something the ONS said was likely a result of warm weather.

But mining and quarrying output fell sharply. On the year, industrial output was up 1.2 per cent. Britain’s robust economic recovery has shown some signs of spreading beyond housing and consumer-facing sectors.

The Bank of England has said it wants to be sure growth is on a firm basis before it raises interest rates from their record low 0.5 per cent.

Last week, a survey of factory purchasing managers by data company Markit showed manufacturing grew at its slowest pace in a year in July, and the Confederation of British Industry also reported slowing orders.

Manufacturing has further to go to catch up on its deep slump after the 2008 financial crisis.