UK manufacturing growth fails to soothe slowdown fears

The British manufacturing sector’s fastest annual growth in more than 15 years failed to soothe fears of a looming slowdown today.

The industry grew at an annual rate of 4.3% during May – the highest since December 1994 – after expanding by 0.3% over the month, according to the Office for National Statistics (ONS).

But the performance was flattered by comparisons with the collapse in output a year ago when the UK was still stuck in recession and experts say the sector is far from out of the woods.

Survey data for June has showed signs of a cooling bounceback among manufacturers as well as nerves in the UK’s powerhouse services sector following British Chancellor George Osborne’s savage Budget squeeze.

“With forward-looking survey indicators of activity in both the industrial and service sectors recently softening – and the effects of the enormous fiscal squeeze yet to kick in – the second quarter may turn out to be as good as it gets,” Capital Economics’ chief European economist Jonathan Loynes warned.