Underlying strength of production and construction sectors could limit the extent of the overall economic slowdown - EY ITEM Club comments

10 March 2017

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  • Industrial and construction output fall in January
  • But the fall masks an underlying strength 
  • GDP growth in Q4 2016 may be revised up to 0.8%

Martin Beck, senior economic advisor to the EY ITEM Club, comments:

“Despite January’s data showing a fall in both industrial production and construction output, this comes on the back of strong increases at the end of 2016.

“The main drag on the industrial production figures was a 0.9% drop in manufacturing output largely due to a reversal of the recent exceptional strength in the volatile pharmaceuticals sector. Otherwise, the official data appears to be largely consistent with the upbeat view from recent business surveys. January’s performance looked even better in the context of upward revisions to the data for Q4 2016. It is possible that the Q4 outturn could be revised up again when the Quarterly National Accounts are published at the end of the month.

“While the consumer slowdown will weigh on services output, the renaissance in the production and construction sectors could limit the extent of the overall slowdown.”