Widening trade deficit sees UK industrial and construction outputs decrease
According to the statistics, the widening trade deficit in UK saw the decline of output in Industrial and construction sector, for the third consecutive month in March. UK’s economy has lost its footing in the beginning of 2017 with severe fallouts, showing the impact of the last year’s Brexit vote on the economy.
While the builders and manufacturers reportedly claimed to have high hopes for growth and increase in the export orders, the figures of the Office for National Statistics show something else altogether. According to the figures obtained from ONS, the output has decreased in the first month itself.
Almost 15% of the economy is dominated by the Industrial sector, but it fell further by 0.7% in February followed by a decline of 0.5% in March. The unseasonal warm weather contributed to a part of the decline, decreasing the output of oil and gas consumption by 4.6%. The manufacturing also declines by 0.6% in March.
Despite the growth in house building, infrastructure- repair and maintenance hit a fall. Analysts expect 0.4% decline in industrial output and 0.4% expansion in construction sector in the months.
With UK’s growth depending heavily on consumer, economists believe that inflation would outpace the wage growth. Hospitality sector has surpasses the pre-crisis level of output but the industrial and construction sects have to yet fully recover.
National Institute of Economic and Social Research (NIESR) estimated the decline of economic growth by 0.2% in April. The 0.7% decline in construction output in March gave rise to the fear of UK economy facing slowdown.
There is uncertainty and the slowdown about Britain’s future relationship with European Union. People are expecting the Bank of England to keep their interest rates as low as possible for two more years. Consumers have become vary of spending money owing to inflation.
Some set of surveys suggest that the year has begun well enough for the manufacturers, however, no official records for the same can be found. The ONS has suggested that Britain’s economy has grown by 0.3% in first quarter which is not as big a rise as in 2016.
Uk’s trade deficit has increased by £5.7bn to £10.7bn in 2017, the first quarter, when compared to the previous quarter. ONS’s records shows that Britain’s goods trade deficit has widened to £13.441bn which is better than the forecast of Reuter’s poll of economists of £11.8bn.
Even though import and export has increased since Feb 2016, there has been decline in the growth of export. There has been decline of 0.2% in export of goods in the first quarter and the import volumes have managed to jump by 3.3%. The trade deficit has grown because there has been import of chemicals and cars as well as oil and mechanical machinery from the European Union.
Theresa May, British Prime Minister, is expected to win the 8 June national elections, despite the weak start of economy.
The total trade deficit, inclusive of the Britain’s surplus services, in the first quarter accounts for 10.540 billion pounds which accounts for more than double decline in the fourth quarter.
The ONS’s figures for the construction output in March rose to 2.4 percent on the year while showing a decline of 0.7% in the month. The Reuters poll accounts to growth of 0.3% and 2.8%.