UK manufacturing has grown at rates not seen in seven years, leading to a narrowing of the trade deficit.
Figures released by the ONS show that in November the manufacturing sector expanded by 0.4%, highlighting a growth rate of 3.9% over a 12-month period: the highest since March 2011.
Although a weak pound has led to a higher rate of inflation for domestic consumers, it has also made British exports cheaper abroad. Despite trade with the EU remaining largely unchanged, there was a sharp increase in exports to non-EU countries. Combined with strong global growth, this has caused the surprise expansion in the manufacturing sector.
In the three months leading up to November, the UK’s total trade deficit narrowed by £2.1bn to £6.2bn, primarily because of an increase in goods exports by 2.6% to £2.2bn. Between October and November 2017 the trade deficit actually widened by £0.5bn, mostly because of an increase in imports of fuels from non-EU countries. Over the year, the trade deficit narrowed by £4.3bn.
This is in stark contrast to the construction centre, which in the three months leading up to November contracted by 2%, the biggest quarterly fall since August 2012.
If forecasts are correct, the UK will have exceeded the 1.5% estimate put out in the November budget but will still lag behind the Eurozone and other G7 economies.
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