Drop in UK industrial production casts doubt on May interest rate hike, warns economist
Energy output got a boost from the unusually cold weather in February
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Your support makes all the difference.UK manufacturing dipped by 0.2 per cent in February, according to the Office for National Statistics, the first time output in the sector has dropped since March last year.
Overall industrial output increased by 0.1 per cent in February, boosted by a 3.7 per cent jump in output from the energy supply sector due to the unusually cold weather.
However, output in the mining and quarrying sector fell by 2.7 per cent month-on-month in February, mainly because of the closure of two of the six major oil refineries and the one-day closure of the Forties oil pipeline.
An 8.6 per cent decline mining and quarrying over the the three months to February, led to an overall decline in industrial production of 0.1 per cent, compared with the preceding three month period.
The decline in production reflects a general trend that shows growth has slowed over the past year, said Samuel Tombs, chief economist at Pantheon Macroeconomics.
“The modest stimulus to growth from sterling’s 2016 depreciation has begun to fade, while the global trade upswing has lost some momentum too,” he added.
Mr Tombs said while total industrial production likely increased over the first quarter, giving a boost to GFP, “this won’t be enough to offset weakness in retail sales, consumer services spending and construction activity, all partly induced by the bad weather”.
“All told, today’s data look consistent with GDP growth slowing to 0.2 per cent in Q1… from 0.4 per cent in Q4, casting doubt over whether a May rate hike is as likely as markets currently expect,” he added.
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