U.K. manufacturing output dropped more-than-expected at the start of the second quarter, lifting chances of the economy going into a longer recession.
Manufacturing output dipped 0.7 percent month-on-month in April, reversing March's 0.9 percent rise, the Office for National Statistics said Tuesday.
The latest decline led by pharmaceuticals far exceeded economists' forecast of 0.1 percent fall. Among manufacturing sub-sectors, seven reported declines, while six sectors showed expansion.
The industrial sector is likely to remain a drag on overall GDP growth for some time to come, Samuel Tombs, UK economist at Capital Economics said.
Overall industrial production remained flat on month versus a 0.3 percent fall in the previous month. Economists had forecast a 0.1 percent rise for April.
Lifted by the very cold weather, output in the electricity, gas, steam and air conditioning sector advanced 13.6 percent. This increase was offset by the mining and quarrying sector, which fell by 5.7 percent.
Annually, manufacturing output dipped 0.3 percent, confounding the 0.4 percent increase expected by economists. However, the rate of decline slowed from March's 0.9 percent drop.
Likewise, industrial output fell 1 percent, following a 2.6 percent drop in March. This was the 14th consecutive fall on the same month a year ago.
Manufacturers' organization EEF forecasts the manufacturing sector to undergo a 0.1 percent contraction this year after a sharp downturn last year. With economic recovery gaining speed, the sector is expected to expand 2.2 percent in 2013.
The U.K. economy slipped into a double-dip recession in the first quarter, by marking a 0.3 percent contraction each in the first quarter of this year and the fourth quarter of 2011.
The Bank of England last week decided not to raise the size of the quantitative easing from GBP 325 billion despite headwinds from Eurozone.
by RTT Staff Writer
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