Recovery hopes hit by shrinking factory output

 

The worst month for Britain’s manufacturers since January and a widening trade deficit gave a reality check to recovery hopes today following a raft of upbeat news.

Buoyant retail spending, the biggest surge in demand from would-be homeowners since 2009, and rising confidence among financial executives have fuelled the feelgood factor surrounding the economy in recent days. But manufacturing output shrank by a bigger than expected 0.8 per cent in May, confounding more positive survey data and City expectations of a rise. Overall industrial production remained stagnant in May, the Office for National Statistis added.

Moody’s Analytics UK economist Melanie Bowler said it could take until “close to the end of the decade” for manufacturers to make a full recovery as output lags 13% below its pre-recession peak. She said: “We do not anticipate a strong, sustained recovery in industry for some time, given that domestic demand remains bound by fiscal austerity and that still-severe economic difficulties facing key euroland trade partners suggest demand for British exports will remain contained.”

The UK’s goods trade gap with the rest of the world meanwhile widened to £8.5 billion in May, leaving it unlikely to make the same contribution to growth seen in the first quarter. Excluding oil and one-off items, exports have grown 1.3 per cent over the past quarter, compared with a 1.4% rise in imports.

Bright spots included a narrowing of the trade deficit with China as exports grew 17 per cent  above the UK average, but experts saw little sign of a significant trade boost. Berenberg bank economist Rob Wood said: “An export-led recovery this is not. All the pressure is on the consumer and the services sector to maintain growth.”

There was better news from advertisers, who grew spending 2.4 per cent  in the first quarter, according to the Advertising Association and research firm Warc. Internet advertising was the main driver, surging 11 per cent . “These figures don’t just reflect growing confidence, they represent an important investment in the recovery,” said Tim Lefroy, chief executive of the AA.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Stockbroker

£Basic (OTE) + Uncapped Commission: Guru Careers: A Stockbroker (qualified / p...

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence