First fall in UK production for a year surprises forecasters

Britain’s factories recorded a surprise fall in production in February, the first drop in activity for almost a year.

Confirming fears of a slowdown in the UK economy so far this year, figures from the Office for National Statistics showed manufacturing output declined by 0.2% in February, falling well behind economists’ expectations for growth of 0.2%.

There was also a sharp drop in construction output, suggesting continued pain for the industry amid the fallout from the collapse of Carillion.

Factories producing machinery such as turbines, pumps, compressors and agricultural toolsrecorded the sharpest falls in February, the worst month for the manufacturing sector since March last year.

Compounding fears for the health of a sector that generally performed better than much of the economy last year, the ONS said there was no evidence that heavy snowfall in February had a negative impact on output.

Overall industrial production, which includes mining, quarrying and energy, rose by 0.1% compared with the previous month. Energy supply provided the biggest contribution, rising by 3.7%, helped by the cold weather.

The figures provide a snapshot of the economy just before the worst of the snowfall from the “beast from the east” in early March, meaning there could be worse news to come from manufacturers.

There had been signs of the weakness for the economy earlier this year from company surveys, which showed falling activity compared with the final months of 2017.

However, there was better news for Britain’s trade deficit – the difference between imports and exports – which shrank more than expected to £10.2bn in February from £12.2bn in January.

Lee Hopley, chief economist at EEF, a manufacturing lobby group, said: “The data looks more like a temporary wobble than a turn for the worse. While other indicators may have softened since the start of the year, ongoing growth in the global economy should continue to spur growth across manufacturing in the coming quarters.”