U.K. Manufacturing, Construction Data Cast Doubt Over Economy
Monday, 11 June 2018 16:02 WIB | ECONOMY |Ekonomi inggrisUK Manufacturing
U.K. manufacturing output fell the most in 5 1/2 years in April and construction posted a smaller-than- expected gain, casting fresh doubt over the health of the economy.
Factory production shrank 1.4 percent, the most since 2012, the Office for National Statistics said on Monday. Economists had expected an increase. Building output rose 0.5 percent, well short of the strong rebound expected after a snow-blighted March.
There was also disappointing news on trade, as the deficit unexpectedly widened to a five-month high amid a sharp drop in exports to countries outside the European Union.
The figures may cause the Bank of England to question its assumption that the pronounced economic slowdown in the first quarter will prove temporary. The central bank has said more interest-rate increases will be needed to bring inflation back to its 2 percent.
Nine out of 13 manufacturing sectors saw output fall in April, led by metals and transport equipment. Production fell 0.5 percent in the latest three months, the first decline in almost a year.
Overall industrial production fell by 0.8 percent on the month, the most this year, with demand for energy declining as warmer weather returned.
Separate figures showed the trade deficit widening to 14 billion pounds. Exports fell 5.9 percent, the largest drop since 2015, and imports rose 0.8 percent. Imports were boosted by higher crude volumes but rising oil prices had little impact.
The figures may call into question whether trade will contribute to growth in the second quarter, with the shortfall including services widening to 5.3 billion pounds in April. Goods export volumes fell 6.1 percent, the most since August 2014.
In a speech last week, BOE policy maker Dave Ramsden pointed to a range of signs suggesting the economy gained momentum in the second quarter. They include a rebound in retail sales and consumer credit and stronger business surveys, including the latest reading of the dominant services sector.
But while the BOE expects growth to accelerate to 0.4 percent from 0.1 percent in the first quarter, purchasing- manager surveys showed Brexit fears weighing on new orders across the economy last month.
Source : Bloomberg