(Bloomberg) -- U.K. manufacturing and construction unexpectedly shrank in February, adding to signs that the economy lost momentum in the first quarter.
Factory output fell 0.1 percent from January, the Office for National Statistics said on Friday. Total industrial production declined 0.7 percent as unseasonably warm weather reduced demand for energy. Construction dropped 1.7 percent, the most in almost a year.
While industrial output and construction are still likely to contribute modestly to growth in the first quarter, the economy will get no help from trade, which drove the expansion in the final period of 2016.
The deficit in goods and services grew to 3.66 billion pounds in February, meaning the shortfall will widen in the first quarter unless March posts a near-unprecedented surplus.
Exports fell 0.1 percent in February and imports rose 1.2 percent, although the latter was boosted by shipments of non-monetary gold and aircraft. Excluding erratic items, imports fell 1.7 percent.
The fall in manufacturing was the second in succession, casting doubt on the benefits firms are getting from the weaker pound. Only seven of 13 subsectors posted increases in February. Pharmaceuticals, which tend to fluctuate from month to month, dropped 4.4 percent.
The decline in construction followed a flat January. Together, building output and industrial production account for a fifth of the U.K. economy.
The figures come against a deteriorating backdrop as accelerating inflation erodes the purchasing power of consumers and looming Brexit talks cloud the outlook for investment. Bank of England policy maker Gertjan Vlieghe indicated this week he is in no hurry to demand an end to record-low interest rates.
Key to the first quarter will be the performance of the dominant services sector.
To contact the reporter on this story: lmeakin1@bloomberg.net.
To contact the editor responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Andrew Atkinson
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