UK industrial sector under pressure as manufacturing output slumps

Britain's industrial sector remained under pressure in March, with manufacturing output dropping sharply on an annual basis, official figures released on 11 May showed.

According to the Office for National Statistics (ONS), industrial production in the UK fell 0.2% year-on-year in March, compared with an upwardly revised 0.1% gain in the previous month and with analysts' expectations for a 0.4% drop.

The ONS attributed the downturn to a disappointing display across the board, which saw declines in two of the four main sectors. Manufacturing, the largest component of production, was the main contributor to the drop, as output fell 1.9% year-on-year, in line with analysts' forecast. The figure, however, marked a steeper decline than the upwardly revised 1.6% drop posted in the previous month.

On a month-on-month basis, industrial production grew 0.3% in March, reversing the upwardly revised 0.2% decline posted in the previous month but falling short of analysts' expectations for a 0.5% gain.

On a monthly basis, manufacturing output climbed 0.1% in March, compared with a 0.9% decline in the previous month. The March figure was revised upward from the initially reported 1.1% drop, but did not quite reach the 0.3% figure economists were expecting.

"While Brexit uncertainty may be partly to blame, the sector's poor performance of late is certainly nothing new and many of the headwinds to growth in 2015 emanating from a weak global environment are still in place," said Ruth Miller, UK economist at Capital Economics.

"But we still expect things to look up as the year progresses. Sterling's recent depreciation and our expectations that global growth will pick up slightly in 2016 should allow the sector to return to modest growth later this year."

Meanwhile, the ONS added total production output is estimated to have fallen 0.4% between the final quarter of last year and the first quarter of 2016, with the largest contribution to the quarterly decrease came from mining and quarrying, which saw output fall by 2.3%.

Manufacturing output, meanwhile, declined 0.4% quarter-on-quarter in the first three months of 2016, with the largest contribution to the decrease coming from the manufacture of coke and refined petroleum products, which slumped 12.1%.