UK May Industrial Production Fell 0.1%, Disappointing Run Continues

Marcus Newton
July 9, 2017

The rate of decline in overall construction output was the second fastest since March 2016, exceeded only by February this year.

Official figures showed manufacturing output dropping 0.2 per cent in May from the previous month compared with forecasts for 0.5 per cent expansion. In the first three months of 2017, the British economy grew by a muted quarterly rate of 0.2 percent, the lowest of all Group of Seven industrial economies, largely because higher inflation and Brexit uncertainties kept a lid on consumer spending.

United Kingdom industrial production declined 0.1% in May compared with expectations of 0.3% growth on the month and there was an annual decline of 0.2% compared with expectations of a small increase.

The pound's reaction to the figures was predictably disappointing, with the currency falling 0.59% and 0.48% against the dollar and the euro and trading at $1.2893 and €1.1296.

There was weakness in the pharmaceutical sector on the month and energy output also declined due to warmer weather conditions.

The last four monthly releases have all been weaker than consensus forecasts.

"And though an improved performance from the services sector will provide some support, GDP is likely to have grown by just 0.3% with the risks to that projection skewed to the downside".

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EY Item Club chief economic adviser Howard Archer says the figures come on the back of several months of soft data and are set to drag of Q2 GDP growth.

Growth in the second quarter was likely to edge up only slightly to 0.3 percent, the National Institute for Economic and Social Research, a leading think tank, said.

Industrial output in the eurozone's second-largest economy rose 1.9% on the month in May.

In a separate communique, the ONS said the trade deficit widened by GBP 1 billion to GBP 3.1 billion in May, reflecting an increase in imports of goods.

Recent weeks have seen speculation that the Bank of England could raise rates later this year.

Meanwhile in the housing market, Halifax reported a 1 per cent fall in house prices in May.

Other reports by MaliBehiribAe

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