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Money U.K. Factory, Construction Data Cast Doubt Over Economy

06:10  12 june  2018
06:10  12 june  2018 Source:   msn.com

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Trade data also disappoints as deficit widens on export drop. 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 .

A picture of an economy losing momentum was reinforced by figures from the BOE showing unsecured credit rose just Other PMIs to be published this week, including for construction and the dominant services sector, will set the At ING, economist James Smith described the data as concerning.

  U.K. Factory, Construction Data Cast Doubt Over Economy © PA 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. The pound weakened.

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.

Manufacturing Slump © Bloomberg Manufacturing Slump

There was also disappointing news on trade, as the deficit unexpectedly widened to a 19-month high amid a sharp drop in exports to countries outside the European Union.

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U .S. stocks, which opened higher on relief lawmakers in Washington had struck a deal to ward off a national default, turned negative on the weak factory data . Economists have said the prospect the United States could default on its obligations had cast a chill over the economy in July.

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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 target.

The pound reversed gains after the report and was at $1.3352 as of 11:50 a.m. in London, down 0.4 percent on the day.

Related: Britain's biggest carmaker to move SUV production to Slovakia

  U.K. Factory, Construction Data Cast Doubt Over Economy © Bloomberg

Nine out of 13 manufacturing sectors saw output fall in April, led by metals and transport equipment. Production fell 0.5 percent between February and April, the first decline in almost a year, after factories trimmed output for a third consecutive month.

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A general view of the factory floor at Camira Fabrics in Huddersfield, Britain, May 2, 2017. Other PMIs to be published this week, including for construction and the dominant services sector, will set the backdrop for the Monetary At ING, economist James Smith described the data as concerning.

Eoin Treacy's view The strength of the Pound over the last 18 months will have been at least a contributory factor in the underperformance of factory output that has been cropping up Watch next. Trump Casts Doubt On Upcoming Summit With No South Korea Offers to Mediate to Clear Doubt

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  U.K. Factory, Construction Data Cast Doubt Over Economy © Reuters

Warmer Weather

Overall industrial production fell by 0.8 percent on the month, the most this year, with demand for energy declining as warmer weather returned.

The construction industry’s order book took a hit in the first quarter, falling 4.6 percent.

Separate figures showed the trade deficit widening to 14 billion pounds ($18.7 billion), the highest since September 2016. 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 grew 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.

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