U.K. Industrial Production Rises on Steady North Sea Oil Output

By Wiktor Szary and Jason Douglas Features Dow Jones Newswires

U.K. industrial production grew unexpectedly in June, data showed Thursday, as North Sea oil fields continued to pump instead of going into their usual summer maintenance.

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Industrial output rose by 0.5% on the month in June, the Office for National Statistics said, surpassing the expectations of analysts polled by The Wall Street Journal, who forecast a drop of 0.2%.

Factory production was flat on the month, despite analysts' expectations for a slight decline, the figures also showed.

Overall, production in the second quarter of the year fell by 0.4% on the quarter, driven largely by a car industry-led 0.6% decline in manufacturing, the ONS said.

Factory output for exports increased, but not fast enough to offset the weak domestic demand, government statisticians said, a sign that a hoped-for rebalancing of the economy in the wake of the pound's steep depreciation last year has yet to materialize.

This was reflected in official trade figures, also released Thursday, which showed that the U.K.'s trade deficit in goods widened in June, and stood at GBP12.7 billion ($).

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This was higher than the GBP11.3 billion deficit seen the previous month, and GBP1.7 billion more than expected by economists.

Based on the current figures, net trade made no contribition to economic growth in the second quarter, government statisticians said.

As accelerating inflation squeezes consumer spending-a key engine of U.K. growth-economists say that production and trade will have to do more heavy-lifting to stave off the already-evident economic slowdown.

Preliminary estimates showed that the economy grew by 0.3% in the three months through June, largely thanks to a warm summer, which encouraged shoppers to go out and spend.

The second-quarter economic growth was above the 0.2% growth seen in the preceeding three months, but still only less than a half of the 0.7% expansion seen at the end of last year.

Write to Wiktor Szary at Wiktor.Szary@wsj.com and Jason Douglas at jason.douglas@wsj.com

(END) Dow Jones Newswires

August 10, 2017 04:55 ET (08:55 GMT)