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UK’s manufacturing output declines in October, industrial output better than expected

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 8, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Mumbai) - The Office for National Statistics today reported a fall in UK’s manufacturing output for October. Manufacturing output was expected to stagnate in October. It fell 0.4 per cent month on month, lower than September’s 0.9 per cent increase. Manufacturers have been particularly hurt by low oil prices. Year on year comparison shows manufacturing output came in 0.1 per cent lower than the same period last year, once again falling short of 0.1 per cent rise estimated. Manufacturing output remains around 6.1 per cent below the level that it had reached when at peak. Today’s manufacturing data dims hope that this sector will contribute to raise over all growth in this fiscal.

    A survey published on 19th November showed British manufacturers expect their output will fall in the coming three months, the first such decline in three years. The Confederation of British Industry also mentioned that expectations for manufacturing output over the next three months worsened to -6 from +5 in October, the first prediction of a fall since November 2012.

    Today’s data spells bad news for the BoE which will meet this Thursday to take interest rate related decision. The Monetary Policy Committee is expected to leave borrowing costs unchanged at 0.5 per cent. The central bank can be expected to raise rates in the second quarter of 2016.

    Industrial output increases

    Industrial production however grew more than expected. Year on year it grew 1.7 per cent beating the 1.3 expected figure; while month on month comparison shows a rise of 0.1 per cent in industrial production. Industrial production was also expected to have stagnated in October. Industrial production, though has looked up, continues to remain 9 per cent below its peak it had climbed in early 2008.

    Growth in UK mainly driven by consumer spending

    UK’s economy had grown faster than other developed countries in 2014. This year too it will likely stay ahead of the rest. The growth this year has been driven primarily by domestically focused services, hampering the scope for a balanced recovery. Consumer spending has driven growth this year. The British Retail Consortium’s today’s data however showed retail spending grew at the weakest pace for any November since 2011.
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