Double dose of economic cheer despite construction slump

Britain's industrial sector has enjoyed its strongest run for nearly 25 years while the trade gap narrowed, handing the Government a double dose of economic cheer despite the uncertainty surrounding Brexit.

Figures from the Office for National Statistics (ONS) showed industrial production unexpectedly grew by 0.7% month-on-month in September, recording its sixth straight month of growth for the first time in 23 years.

While the trade gap also shrank by £700 million to £2.75 billion over the period, the UK construction industry endured a torrid time, falling by a deeper-than-expected 1.6% between August and September as new work sank by 1.3%.

The picture also proved bleak for the third quarter, with construction output tumbling 0.9% and recording its first back-to-back quarterly fall for five years.

Chris Williamson, IHS Markit's chief business economist, said the data points to a "multi-speed economy" that is not firing on all cylinders.

He said: "According to data from the Office for National Statistics, both industrial production and manufacturing output surged 0.7% in September, notching up the best performance so far this year.

"The wider measure of industrial production (which includes energy and mining) and factory output were consequently both 1.1% higher in the third quarter, providing an important boost to the economy.

"It was a different story altogether for the building sector, with construction output down 1.6% in September. That leaves construction output down 0.9% in the third quarter following a 0.5% decline in the second quarter.

"The third quarter decline pushes the building sector into a technical recession for the first time since 2012.

"The overall picture is therefore one of the economy continuing to show relatively resilient growth, albeit with an undercurrent of heightened uncertainty surrounding Brexit posing downside risks to economic activity in coming months, especially business investment."

It comes after previously released figures showed the UK economy accelerated to 0.4% in the third quarter, with the lion's share of the expansion coming from the services and manufacturing industries.

However, economic growth is still struggling to bounce back to levels seen in the final quarter of 2016 when GDP rose by 0.6%.