U. K. factory output rose in August following a decline in July, official data showed Friday, signaling that British manufacturers have benefited only modestly from the weakened pound, which fell steeply in the wake of the country’s June 23 vote to leave the European Union.
U.K. factory output rose by 0.2% on the month in August, the Office for National Statistics said, with some evidence suggesting British car makers are increasing their production to meet the higher overseas demand.
Recent business surveys have showed that the weakened currency is giving British manufacturers a boost, making their products cheaper for overseas buyers. The monthly growth in manufacturing, however, was below the expectations of analysts polled by The Wall Street Journal, who predicted a 0.5% rise.
The August manufacturing rebound appears also to be less pronounced than that signaled by the purchasing managers index for manufacturing, a closely watched gauge of the sector’s sentiment, which bounced back sharply in August following a steep post-referendum fall in July.
Sterling plunged to a fresh three-decade low against the dollar earlier this week, after U.K. Prime Minister Theresa May on Sunday set a March deadline to begin exiting the EU and indicated that maintaining its privileged access to the country’s largest trading partner was a lower priority than controlling immigration. The currency suffered a further significant drop earlier Friday.
The U.K.’s overall industrial output fell by 0.4% on the month, data showed, below analysts’ expectations of no growth. This was driven by a fall in oil and gas production, as some fields were shut down for maintenance, the ONS said.
Despite the fall in the pound-which makes overseas goods more expensive for Britons-the country’s trade deficit with the rest of the EU widened to a record £ 8.4 billion ($10.6 billion), ONS data showed separately, as imports jumped.
The country’s total goods trade deficit also widened and stood at £ 12.1 billion in August.