Business Watch

UK Economy Contracts in April

The UK’s economy shrank in April amid a dramatic fall in car production and a host of planned shutdowns which plunged manufacturing activity to the lowest level in almost two decades.

Gross domestic product fell by 0.4% in April, as manufacturing contracted by 3.9%, the Office of National Statistics said in a report early on Monday. According to data compiled by Bloomberg, the drop in manufacturing was the steepest since June 2002. However, over the three months to April, the economy grew by 0.3%, as “high growth” in February outweighed month-on-month economic contractions in March and April.

“There was widespread weakness across manufacturing in April as the boost from the early completion of orders ahead of the UK’s original European Union departure date has faded,” Rob Kent-Smith, the executive responsible for the Office of National Statistics’ GDP segment, said in the report.

The most notable movement in April was the decline in the manufacture of transport equipment. Output in this industry has been weak since October 2018 and contracted by 13.4% in April 2019.

The decline in transport equipment was due largely to a fall of 24.0% in car manufacturing, as firms planned shutdowns around the originally-intended departure date from the European Union. These data are consistent with that reported by the Society of Motor Manufacturers and Traders, which found that car manufacturing was 44.5% lower year-on-year in April 2019.

Manufacture of chemicals, pharmaceutical products, and basic metals were also notably negative in April, the report added.

On June 3, IHS Markit said in a closely followed report that the UK manufacturing sector showed “increased signs of renewed contraction in May.” At 49.4, down sharply from 53.1 in April, the headline seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index fell below the neutral 50.0 benchmark for the first time since July 2016.

The UK’s economy shrank in April amid a dramatic fall in car production and a host of planned shutdowns which plunged manufacturing activity to the lowest level in almost two decades.

Gross domestic product fell by 0.4% in April, as manufacturing contracted by 3.9%, the Office of National Statistics said in a report early on Monday. According to data compiled by Bloomberg, the drop in manufacturing was the steepest since June 2002. However, over the three months to April, the economy grew by 0.3%, as “high growth” in February outweighed month-on-month economic contractions in March and April.

“There was widespread weakness across manufacturing in April as the boost from the early completion of orders ahead of the UK’s original European Union departure date has faded,” Rob Kent-Smith, the executive responsible for the Office of National Statistics’ GDP segment, said in the report.

The most notable movement in April was the decline in the manufacture of transport equipment. Output in this industry has been weak since October 2018 and contracted by 13.4% in April 2019.

The decline in transport equipment was due largely to a fall of 24.0% in car manufacturing, as firms planned shutdowns around the originally-intended departure date from the European Union. These data are consistent with that reported by the Society of Motor Manufacturers and Traders, which found that car manufacturing was 44.5% lower year-on-year in April 2019.

Manufacture of chemicals, pharmaceutical products, and basic metals were also notably negative in April, the report added.

On June 3, IHS Markit said in a closely followed report that the UK manufacturing sector showed “increased signs of renewed contraction in May.” At 49.4, down sharply from 53.1 in April, the headline seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index fell below the neutral 50.0 benchmark for the first time since July 2016.

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