Evidence that the UK economy contracted in the fourth continues to mount after the nation’s industrial and construction sectors posted disappointing production figures.
Industrial production was lower-than-expected, coming in at 0.3% in November, despite a strong showing for oil and gas extraction in the North Sea. Manufacturing output also fell by 0.3%, less than the forecasted rise of 0.5%. Meanwhile the construction sector suffered a contraction of 3.4%.
As a result of the data release the Pound has fallen to a nine-month low against the Euro and weakened against a number of other currencies.
“It’s a disappointing set of data. We had thought that we might see a bounce back in manufacturing output over the month, but what we saw instead was a further contraction,” said Philip Shaw, an economist with Investec in London.
“Most of the official data are suggesting weakness over the fourth quarter.”
The latest forecasts from the government’s fiscal watchdog predict that the UK economy had shrunk over the last quarter of 2012, a prospect already reinforced by weak trade data and downbeat purchasing managers’ surveys.
Despite the gloomy figures not all economists are predicting doom and gloom for the UK.
“With austerity and inflation going nowhere, the outlook for manufacturers is subdued,” said Mike Rigby, who heads up Barclays’ business with companies in the sector.
“However, there may be some respite with encouraging economic signs from abroad, particularly if recent reports that the Eurozone woes may be bottoming out are correct.”
The Pound to Euro exchange rate is currently trading at 1.2144
The Pound to US Dollar exchange rate is currently trading at 1.6116
The Pound to Australian Dollar exchange rate is currently trading at 1.5250
The Euro to US Dollar exchange rate is currently trading at 1.3266
The Euro to Pound exchange rate is currently trading at 0.8231
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