A report released today by the Office of National Statistics has revealed that in July U.K. industrial production rose by the most for a quarter of a century.
Production fell 2.4 per cent in June but surged by 2.9 per cent from June, despite the Jubilee Bank Holiday disruption.
This is the biggest increase since February 1987 and 1.4 per cent higher than the median figure forecast by the 28 economists participating in a Bloomberg News Survey. In fact, 11 of the 13 manufacturing categories experienced a rise. According to the Office for National Statistics only 2 sectors fell in July.
The manufacturing increase also defied economists’ predictions whilst factory output made up for a 2.9 fall in June by increasing 3.2 per cent – a ten year best.
Prior to the data being released an economist with IHS Global Insight commented ‘This does not fundamentally change the story of a struggling economy.’ Howard Archer went on to say; ‘U.K. manufacturers are clearly facing a very challenging domestic and international environment.’
The London based statistics office commented that first quarter Gross Domestic Product will increase by 0.05 percentage points in light of revisions to industrial production data, but that the difference they make to second quarter figures will be ‘minimal’.
Additionally, the draw of the Olympics might have given retail figures a knock but the Office of National Statistics has estimated that ticket sales for the event, when combined with ticket sales for the Paralympics, will produce roughly £580 million of revenue and add around 0.2 per cent to Gross Domestic Product.
In a separate report compiled by the statistics wizards, factory output prices were reported as being up 2.2 per cent on the previous year after increasing by 0.5 per cent in August. Likewise, August input prices jumped by 2 per cent, a rise of 1.4 from July of 2011. There are also hopes that equilibrium may be returning to the construction sector after constructions orders climbed by 0.2 per cent.
Although the figures and phrases like ‘jumps most in 25 years’ sound good, you have to remember that industrial production has fallen by 0. 8 per cent when compared to the same time last year, and manufacturing has dropped by 0.5 per cent in the same time frame. Yesterday the Organization for Economic Cooperation and Development negatively adjusted its U.K. outlook, envisaging that GDP would not rise by the 0.5 per cent they originally predicted for this year but would actually fall by 0.7 per cent.
The Bank of England has also described the situation as ‘unusually uncertain’ and is steadfastly holding onto its bond-purchase target of £375 billion, although further stimulus is predicted.
Still, after the economy shrunk by 0.5 per cent in the second quarter this is positive news and possibly a sign that the economy is moving ever so slowly towards recovery.
After the data was released the pound remained higher than the dollar, increasing by 0.3 per cent on the day.
The Pound to Euro exchange rate is currently trading at 1.2561
The Pound to US Dollar exchange rate is currently trading at 1.5935
The Pound to Australian Dollar exchange rate is currently trading at 1.5409
The Euro to US Dollar exchange rate is currently trading at 1.2685
The Euro to Pound exchange rate is currently trading at 0.7960
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