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London - The UK economy ended the second quarter on a disappointing note as manufacturing stagnated and the trade deficit unexpectedly widened, figures published Thursday show.
Total industrial production rose 0.5% in June, more than economists forecast, but the gain was due to higher oil production as summer maintenance shutdowns failed to materialize.
Manufacturing was unchanged as production of vehicles plunged by 6.7%, the biggest drop since the end of 2013, according to the data from the Office for National Statistics. Construction output posted a surprise 0.1% decline and the trade deficit widened to a nine-month high of £4.6bn as exports slid and imports climbed.
For the second quarter as a whole, industrial output fell 0.4%, unrevised from the estimate in last month’s GDP release. Construction declined 1.3% instead of 0.9%, reducing GDP by a negligible 0.01%.
Surveys covering the start of the current quarter suggest manufacturers are being buoyed by strong overseas demand, helping to underpin growth as inflation squeezes the pockets of consumers and Brexit uncertainty weighs on the investment outlook.
Manufactured exports grew in June but the increase was not enough to make up for the weakness of domestic production, the ONS said.
The economy grew just 0.3% in the second quarter, half the pace of the euro region, and economists predict a similar expansion in the second half - weak enough for the Bank of England (BoE) to keep interest rates at a record-low for now.
Weaker exports
In the construction sector, buoyant private housing and industrial work were offset by weakness elsewhere including infrastructure and public housing.
Separate trade figures showed the value of exports falling 0.7% in June, with shipments of goods alone dropping 2.8%. Total imports rose by 3.3%. The deficit in the second quarter was little changed at £8.9bn, suggesting net trade made no contribution to growth in the period.
A report by BoE regional agents this week suggested the weak pound is increasingly leading companies and consumers to choose British products over pricier foreign alternatives.
Growth in core import volumes slowed to an annual pace of 4.5% in the second quarter from 7.4% in the first. Export growth was little changed at 6.2%.
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