ONS says output fell by 1.4% in April due to wider slowdown in demand for British goods

Britain’s factories unexpectedly recorded the sharpest fall in output for more than five years in April amid falling demand for steel and electrical machinery, raising fresh concern over the strength of the economy.

Pointing to fewer orders for steel used in infrastructure projects and a wider slowdown in demand for British goods at home and abroad, the Office for National Statistics said manufacturing output fell by 1.4% in April from the previous month. Economists had forecast modest growth of 0.3%.



The figures will trouble ministers at a time of growing concerns for the UK steel industry, which faces pressure from US import tariffs that could rekindle the crisis of two years ago, when a glut of Chinese imports threatened to bankrupt British producers.



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Overall industrial output – which includes manufacturing, utilities and mining – dropped in April by 0.8% compared with the previous month, led by the fall in factory production and similar declines for energy supply and water usage.



The figures were released as the National Institute of Economic and Social Research forecast only a modest rebound for growth in the three months to the end of May, predicting a rise in GDP of 0.2% during the period, up from a rate of 0.1% in the three months to the end of April.

Amit Kara, Niesr’s head of UK macroeconomic forecasting, spoke of risks to the economy from Brexit and escalating trade tensions, saying: “Economic growth has slowed materially since the start of this year and it continues to remain weak.”

Union leaders seized on the manufacturing figures to criticise the government for its stance on Brexit and not doing enough to support businesses amid the mounting trade tensions with the US. Labour and business groups have attacked ministers for mishandling the industrial strategy, pointing to a lack of progress made since it was launched in the autumn.

Jude Brimble, the national secretary of the GMB union, said: “Between Trump wanting to slap tariffs on our steel and the UK government refusing to be in a European customs union, UK manufacturing risks being stranded.”



There was a slight monthly pick-up for construction industry output in April as builders staged a recovery from the heavy snowfall in March. Yet the ONS said the three months to April remained the worst period for the trade since August 2012.

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The figures will renew fears the slowdown for the British economy in the first three months of the year was not just a one-off, adding to problems that could deter the Bank of England from raising interest rates in August. “Given how sharp the fall was, it’s easy to try to pin it down to some kind of temporary aberration. But that doesn’t appear to be the case,” James Smith, an economist at ING Bank, said.

“Remember, too, that April was supposed to be the month where production rebounded following the snow-related disruptions seen in March.”



The latest figures also showed the UK’s trade position with the rest of the world deteriorated further in April. Britain’s trade in goods deficit, which is the difference between products sold abroad and imported to the UK, unexpectedly widened by about £2bn to reach £14bn – the biggest monthly gap since September 2016.

Suren Thiru, the head of economics at the British Chambers of Commerce, said a sweet spot for exporters could be reaching an end. “The possibility of an escalating trade war has added to the downside risks for exporters,” he said.