Further evidence that the UK economy is operating at two speeds – or even moving in two directions – emerged in official statistics for the first quarter of 1999.
Gross value added in manufacturing fell for the third successive quarter, and is now 1.2% lower than a year ago. But the service sector continued to grow, albeit more slowly than in previous quarters.
Investment in manufacturing fell in the first quarter, making the slight rise at the end of 1998 look like a blip. Overall investment fell, a slight rise in service investment failing to make up for the fall in manufacturing investment.
Engineering fared better than other sectors in manufacturing. Orders on hand showed a 0.9% increase and turnover reached an all-time quarterly high at the start of the year.
The most successful part of the engineering sector was electrical and optical equipment, which includes mobile telephones. Turnover in this sector rose 6.1% over the year.
Machine tool makers have been exporting more over the past year, which has partly made up for a weak home market. But exports started to decline in the first quarter of this year and export orders are coming in slowly.