Construction and manufacturing output drop signals economic slowdown

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Output in Britain's construction and manufacturing industries remained under pressure in February and the trade gap widened, pointing to a slowdown in momentum for the UK economy.

Figures from the Office for National Statistics (ONS) showed construction output came in shy of expectations, falling by 1.7% in February, down from a revised reading of 0% in January.

Industrial production output also fell short of economists' predictions, recording a monthly drop of 0.7% compared to a decline of 0.3% the month before.

The move was largely caused by a fall in electricity and gas demand driven by unseasonably warm weather, while manufacturing also eased back by 0.1% in February compared to a contraction of 1% in January.

Britain's deficit in goods and services, the gap between exports and imports, expanded by £700 million on the month to £3.7 billion in February

The increase was triggered by a jump in imports of non-monetary gold and aircraft, with total exports falling by £400 million and total imports rising by £300 million.

Stripping out erratic items such as ships, silver, aircraft and precious stones, the ONS said the trade deficit shrunk to £2.5 billion in February from £3 billion the month before.

Kate Davies, ONS senior statistician, said: "While manufacturing was broadly flat in February, unseasonably warm weather reduced gas and electricity use, pulling down overall production.

"The overall trade deficit worsened, but excluding erratic items the picture improved, as imports fell more than exports.

"There were small falls across a range of construction sub sectors for the second month running, following a record performance for the industry at the end of 2016."

The construction industry was dragged down in February by a 7.3% month-on-month slide in infrastructure work, while new housing also fell by 2.6% over the period.

Despite monthly falls, the construction and manufacturing industries saw a more positive picture over the three months to February.

Construction output grew for the fourth three-month period on the bounce, increasing by 1.5%, while manufacturing increased by 2.1%.