U.K. manufacturing output expanded more than expected in March led by the sharp improvement in production of chemical and transport equipments, data from the Office for National Statistics showed Thursday. But, the increase was insufficient to lift industrial production.
Manufacturing output grew a more-than-expected 0.9 percent from February. Economists had forecast factory output growth of 0.5 percent after contracting 1.1 percent in February.
Factory sector clearly faces serious challenges that are limiting its performance and at least its near-term prospects, said IHS Global Insight's Chief UK Economist Howard Archer.
Declines in energy and mining output led to a 0.3 percent monthly fall in industrial production in March. The decrease reversed a 0.4 percent rise in February and matched economists' expectations.
The energy sector output fell 6.4 percent and the mining and quarrying sector decreased 2.5 percent. Oil and gas extraction was down 3.8 percent.
Industrial production fell a seasonally adjusted 2.6 percent in March compared with the same period of last year. This was the 13th consecutive annual fall and was in line with expectations. In February, overall production was down 2.3 percent.
The annual decline in manufacturing output was 0.9 percent in March as seven sub sectors fell. March's decrease followed a 1.5 percent drop in February and was smaller than the expected 1.3 percent drop.
In the first quarter, industrial production decreased 0.4 percent as estimated for GDP calculation. So there is no impact on GDP data published on April 25, the ONS said.
After a 0.2 percent sequential decline in gross domestic product during the first quarter, the U.K. entered a double-dip recession for the first time since 1970s.
With the Eurozone heading into a deeper recession and domestic demand continuing to struggle, it is becoming increasingly difficult to see what the locomotive behind an industrial recovery could possibly be, Samuel Tombs, an economist at Capital Economics said.
The Bank of England is set to announce its interest rate decision later today. The nine member Monetary Policy Committee is expected to leave the size of the quantitative easing unchanged at GBP 325 billion as inflation remains sticky. The interest rate is also seen unchanged at a historic low of 0.50 percent.
by RTT Staff Writer
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