Business

Struggling car sector drives fall in industrial production


A plunge in car manufacturing meant UK industrial production dropped during the three months to the end of November, echoing weakness across Europe and suggesting that any pre-Brexit stockpiling was failing to boost the sector.

Industrial production was 0.8 per cent lower during the three months to November than during the previous three months, according to figures from the Office for National Statistics.

Cars led the slowdown, with production down by 2.4 per cent over the same period.

The British auto industry has been contending with a combination of a slowdown in China, new EU-wide emissions tests and the decline of diesel engines as well as uncertainty over future trading arrangements.

The figures were published the day after the industry faced a triple blow as Jaguar Land Rover, the UK’s biggest carmaker announced plans to cut 4,500 jobs in the UK, Ford announced a reorganisation of its European operations and Japanese carmaker Honda said it would temporarily shut its UK plant in Swindon for six days to avoid disruption from a disorderly Brexit.

Francesco Arcangeli, economist at the manufacturer’s trade body the EEF, said: “The sector, which is crucial for several manufacturing sub-sectors in the country, appears to be in a very weak spot and it would appear the knock-on effects are now having significant consequences for the supply chain.”

Metals production and electronics production were also down sharply compared with the year before.

The data follow similarly bleak industrial production numbers for Germany, Europe’s biggest economy, France, Spain and Italy, according to figures released this week, suggesting that manufacturing is in trouble across the EU as China slows and the car industry adapts to the new testing regime.

A benign international environment helped support UK growth following the Brexit referendum but the latest data said that export orders were now growing even more slowly than domestic demand.

Britain’s industrial contraction contributed to a slowdown in overall economic growth during the three months to the end of November.

The headline rolling three-month-on-three-month growth rate fell to 0.3 per cent during the period, down from 0.4 per cent in the three months to the end of October, in line with analysts’ expectations.

“The clear loss of momentum in the UK economy since the summer is as expected, given the ongoing lack of clarity on Brexit,” said Mike Jakeman, senior economist at PwC, the advisory servi.

“For as long as this remains unclear, businesses will continue to defer major investment plans and households will reconsider making big-ticket purchases,” he said.



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