Production output rises in July

The main manufacturing components contributing to the increase between July 2013 and July 2014 were the manufacture of rubber, plastic products and other non-metallic mineral products; the manufacture of transport equipment; and the manufacture of basic metals and metal products. The main manufacturing components contributing to the 0.5% increase between June 2014 and July 2014 were pharmaceuticals; food, beverages and tobacco; and computer, electronic & optical products. In the three months to July 2014, production and manufacturing were 11.3% and 7.6% respectively below their figures reached in the pre-downturn GDP peak in Q1 2008. Lee Hopley, chief economist at EEF, said: "The first manufacturing data for the second half of 2014 confirms the picture of a slowing pace of expansion in the sector, with output increasing 0.3% in July. Nonetheless, manufacturing remains on track for growth of over 3% this year, with sectors such as rubber and plastics, non-metallic minerals and mechanical equipment continuing to post strong output gains. "However, weakness in overseas markets remains a drag. Despite increasing over the month, goods exports fell 0.3% in the three months to July, amid an increasingly uncertain overseas environment. This could make sustaining growth more challenging going forward and it is therefore critical that efforts are maintained to keep growth on track in manufacturing and across the whole economy in the remaining months of this parliament." David Kern, chief economist at the British Chambers of Commerce, added: "These figures highlight the strength of the recovery and the challenges still facing the UK economy. On the positive side, the production figures confirm that the recovery is still on course, although the pace of manufacturing growth shows some signs of easing. "However it's a concern that the trade deficit has widened, as this will hamper our ability to rebalance the economy. Stagnation in the eurozone remains a challenge, and reinforces our position that the MPC should not raise interest rates in the immediate future."