U.K. November Industrial Production Drops, Trade Gap Narrows

(RTTNews) - U.K. industrial production fell marginally in November due to a slump in oil and gas extraction, while manufacturing rebounded from the prior month, the Office for National Statistics showed Friday.

The visible trade deficit of the country narrowed to an eight-month low on lower oil imports in November.

Industrial production dropped unexpectedly 0.1 percent from October, when output decreased 0.3 percent. Economists had forecast industrial output to grow 0.2 percent.

The decline reflects a 5.5 percent fall in oil and gas extraction, the biggest since January. Mining and quarrying output declined 3.7 percent.

On the other hand, manufacturing output grew 0.7 percent, offsetting October's 0.7 percent drop. It was the largest growth since February and faster than the expected 0.3 percent increase.

Further, data showed that the annual growth in industrial output improved slightly to 1.1 percent from 1 percent. But, the rate was slower than an expected expansion of 1.6 percent.

Factory output growth accelerated to 2.7 percent from 1.7 percent in October. It was expected to rise 2.3 percent.

Construction output declined unexpectedly in November due to declines in all new work and repair and maintenance, ONS reported. Construction output fell 2 percent from October, while economists forecast a 1.2 percent increase. Output was down 1.9 percent in October.

Another report from ONS revealed that the visible trade gap fell to GBP 8.8 billion in November, the lowest since last March, from GBP 9.8 billion in October. It was expected to decrease to GBP 9.5 billion.

The decline in deficit reflects a fall in imports of goods rather than an increase in exports. Exports fell GBP 0.1 billion to GBP 24.4 billion and imports decreased GBP 1.1 billion to GBP 33.2 billion.

The deficit on trade in goods with EU nations narrowed to GBP 6.2 billion from GBP 6.3 billion in the previous month.

Likewise, the deficit with non-EU nations fell to GBP 2.6 billion from GBP 3.5 billion.

The balance of trade in services showed a surplus of GBP 7.4 billion versus a GBP 7.6 billion surplus in October.

Overall trade, including goods and services, posted a shortfall of GBP 1.4 billion versus GBP 2.2 billion in October.

The suspicion remains that UK growth will remain heavily reliant on domestic demand with net trade finding it difficult to make sustained positive contributions to UK growth in the near term at least, IHS Global Insight's Chief UK Economist Howard Archer said.

The Bank of England yesterday kept its key interest rate at a record low 0.50 percent at the start of the year amid growing concerns about inflation falling below 1 percent in months ahead.

Maeve Johnston, a UK economist at Capital Economics, said 2015 should prove to be a better year for UK exporters and manufacturers, provided the collapse in oil prices is sustained.