U.K. Manufacturing Unexpectedly Jumps on Work-Day Boost: Economy
U.K. manufacturing unexpectedly surged the most in a year in May, boosted by an additional working day after the government moved a public holiday to June.
Factory output rose 1.2 percent from April, when it fell 0.8 percent, the Office for National Statistics said today in London. The median forecast of 26 economists in a Bloomberg News survey was for a decline of 0.1 percent. Italian industrial output also unexpectedly increased in May, gaining 0.8 percent from April, when it fell 1.9 percent. French industrial production dropped.
Central Banks have started a new round of global stimulus in an attempt to limit the fallout from Europe’s sovereign debt crisis, which has already seen five of the 17 euro members seek a bailout. The European Central Bank cut interest rates to a record low last week and the Bank of England expanded its bond- purchase target by 50 billion pounds ($78 billion) to 375 billion pounds as the outlook for the economy worsened. China also lowered borrowing costs.
Today’s U.K. data is “a very good number, but it’s entirely because of the extra day during the month,” said Philip Shaw, an economist at Investec Securities in London. “Underneath it all, it’s hard to say what the underlying path of manufacturing is, but I think the broad implication is that it continues to struggle.”
European stocks rose for the first time in a week on the U.K. and Italy data and as euro-area finance ministers made progress on supporting Spanish banks. U.S. index futures advanced while Asian shares dropped.
The Stoxx Europe 600 Index (SXXP) climbed 1.1 percent to 256.20 at 11:25 a.m. in London. The gauge has risen for five straight weeks, the longest winning streak since January, as the region’s policy makers eased repayment rules for Spanish banks and relaxed conditions for possible aid to Italy. The FTSE 100 Index rose 46.06, or 0.8 percent, to 5,673.39.
The U.K. statistics office said today that manufacturing data for May and June should be treated “with caution.”
The government moved the U.K.’s annual public holiday at the end of May for the queen’s Diamond Jubilee. It also added an extra holiday in June. In 2002, when a similar change happened for the Golden Jubilee, manufacturing rose 0.7 percent in May before plunging 5.3 percent the following month.
In the three months through May, manufacturing fell 0.2 percent compared with the previous three months. Overall industrial production dropped 1.6 percent in May from the same month in 2011, a 14th consecutive annual decline.
In a separate report, the ONS said exports rose 7.8 percent in May from April, led by cars, oil and chemicals. Imports increased 1.5 percent. The goods-trade deficit narrowed to 8.36 billion pounds from 9.71 billion pounds.
The trade balance on services was little changed in May at 5.65 billion pounds, leaving the total trade deficit at 2.72 billion pounds.
China’s imports rose less than anticipated in June, pushing its trade surplus to a three-year high and adding pressure on the government to support demand as the global economy slows.
Inbound shipments increased 6.3 percent from a year earlier, the customs bureau said in a statement today in Beijing, compared with the 11 percent median estimate in a Bloomberg News survey of 32 economists. Export growth slowed to 11.3 percent and the trade surplus rose to $31.7 billion.
The data add to signs of flagging momentum for global growth as Europe’s debt crisis curbs exports and property controls restrain domestic demand in the world’s second-biggest economy.
China’s economic growth may have slowed to 7.7 percent in the second quarter from a year earlier, according to the median estimate of 36 economists in a Bloomberg survey. The economy expanded 8.1 percent in the first three months, the fifth quarterly deceleration. Data will be announced July 13.
French industrial output dropped 1.9 percent in May, the latest sign that the euro area’s second-largest economy is heading for its first quarterly contraction in three years. Economists had forecast a 1 percent decline.
Britain’s economy shrank 0.3 percent in the first quarter after contracting by 0.4 percent in the previous three months. The National Institute of Economic and Social Research will publish its gross-domestic-product estimate for the second quarter later today.
To contact the editor responsible for this story: Craig Stirling at firstname.lastname@example.org