The recovery of UK manufacturing has been “overshadowed” by the continued success of the service sector, according to a leading financial analyst.
Ben Gutteridge, head of fund research at Brewin Dolphin, said despite the growth of manufacturing, the UK economy had not rebalanced as far as George Osborne had hoped, partly due to a “thriving” financial services sector.
Speaking at a Brewin Dolphin client event, Mr Gutteridge said: “Some of the rebalancing issue isn’t necessarily due to the lack of success in manufacturing; I think the service sector is actually thriving. That area of industry for the UK is doing very well.
“The success of the service sector somewhat overshadows the nascent recovery of other parts of industry.”
This month, growth in the services sector hit a three-month low. Manufacturing growth hit its lowest level since April 2013 and new order growth fell for the third month in a row, fuelling concerns about the UK’s recovery.
While UK manufacturing has slowed, it has been a “good story” for the UK, Mr Gutteridge said.
Cyclical elements such as lower demand from Europe and strong currency has contributed to the reduction in growth.
The US has had a “manufacturing renaissance” that has in part been driven by cheap energy, Mr Gutteridge said. However, the energy situation in the UK is “highly political” and is set to become more so in the coming months.
“That political element could have a great influence on that sector,” Mr Gutteridge added.