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U.K. Manufacturing Output Rises Unexpectedly In May

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U.K. manufacturing and industrial production increased unexpectedly in May helped by an additional working day, the Office for National Statistics said Tuesday.

Manufacturing output grew 1.2 percent month-on-month, offsetting a 0.8 percent drop for April. The increase was in contrast to 0.1 percent fall expected by economists.

Likewise, industrial production logged a surprise growth of 1 percent in May from a month ago, when it fell 0.4 percent. Economists had forecast a 0.2 percent fall for May.

The ONS said that an additional working day in May was the factor behind the positive development. As the end of May bank holiday was moved to June, this would negatively affect June data, the agency added.

There is still a very real danger that overall industrial production contracted modestly quarter-on-quarter in the second quarter, Howard Archer, an economist at IHS Global Insight said. Moreover, manufacturers are facing a very challenging domestic and international environment, he said.

The recent Purchasing Managers' survey data showed continuing contraction in the British manufacturing sector in June. The deterioration largely reflects weak incoming new orders.

Driven by declines in ten sub-sectors, manufacturing output dipped 1.7 percent year-on-year. Although the drop was smaller than the 1.9 percent decline expected, it was bigger than April's 1.5 percent fall.

Annually, industrial production fell 1.6 percent in May, marking the 14th consecutive decline on the same month a year ago. The decrease follows a larger 2 percent decline in the prior month, but was better than the 2.1 percent fall forecast by economists.

Output of the mining and quarrying industries fell 9.6 percent annually, while energy supply output rose 6.5 percent.

In a separate communique, the ONS said the U.K. visible trade deficit narrowed to GBP 8.4 billion in May from GBP 9.7 billion in April. The shortfall was below the expected deficit of GBP 9.1 billion.

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