With sterling cheaper, the hope is that UK exporters can sell more and manufacturing can make a return to form. Today, we got the latest data on UK manufacturing for February. Is it working?
The simple answer is no, but that may not be a reason to panic.
UK manufacturing output fell 0.1 per cent in February against the month before, after falling by one per cent in January. The good news is that it still rose by 2.0 per cent over the last three months, but that was thanks to a rather buoyant December.
Industrial production – of which manufacturing is a subset – did even worse. This fell by 0.7 per cent in February and by 0.1 per cent, over the three-month period.
Today we also got data on construction – this fell by 1.7 per cent month on month.
And finally, to complete the set, we got the latest trade figures. The trade deficit grew from £3.0 billion in January to £3.7 billion in February.
So that was a sorry tale of woe.
Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics said: "February’s trade figures are a wake-up call for those hoping that the UK. is about to embark on an export-led boom. The run of relatively small trade deficits over the winter never looked sustainable, because the improvement had been driven by a surge in exports of erratic items."
But, Ruth Gregory, UK Economist at Capital Economics, was a little more cheery, she said that the widening of the trade deficit "was largely due to an increase in imports of erratic goods. Excluding erratics, the trade deficit actually narrowed by £0.5 billion in February."
Turning to industrial production, she said: "The drop in production, was largely down to the impact of the unusually warm weather on the energy supply sector. And the 0.1 per cent fall in manufacturing output reflected a 4.4 per cent monthly drop in the highly erratic pharmaceuticals sector.
She concluded: "despite the disappointing data in February, with temporary factors at play, we remain optimistic that we should see some bounce back at the end of Q1. This should allow GDP growth to post a decent 0.5 per cent or so expansion in Q1.