U.K. Industrial Output Rises More Than Forecast on Energy
U.K. industrial production rose more than economists forecast in March as cold weather boosted demand for electricity and gas.
Output increased 0.7 percent from February, when it gained 0.9 percent, the Office for National Statistics said today in London. The median forecast of 31 economists in a Bloomberg News survey was for a gain of 0.2 percent. Electricity and gas surged 2.4 percent, the most since October. The data also showed that production increased 0.2 percent in the first quarter, matching an estimate in last month’s gross domestic product report.
Britain’s economy grew 0.3 percent in the three months through March and surveys suggest that the recovery may have continued into this quarter. Bank of England policy makers meeting today will probably maintain their target for asset purchases at 375 billion pounds ($583 billion) as they weigh risks to the rebound from the contraction in the fourth quarter.
The data “suggest that the economic recovery gained some momentum towards the end of the first quarter,” said Samuel Tombs, an economist at Capital Economics Ltd. in London. Still, “we doubt that this strong growth will be maintained. With the euro zone still deep in recession, any recovery in the export-dependent industrial sector this year is likely to be limp at best.”
The pound advanced against the dollar and the euro. It rose 0.2 percent to $1.5559 as of 10:31 a.m. London time and was 0.3 percent stronger at 84.43 pence against the euro. The yield on the 10-year U.K. government bond was little changed at 1.77 percent.
The increase in electricity and gas production was partly due to the weather, according to the statistics office, which said it was the coldest March since 1962. From a year earlier, electricity and gas jumped 10.9 percent, the most since April 2008. Mining and quarrying fell 2 percent in March from February, while oil and gas extraction dropped 1.8 percent.
Manufacturing (UKMPIMOM) rose 1.1 percent in March, exceeding the median forecast in a Bloomberg survey for an increase of 0.3 percent. Out of 13 categories in manufacturing, eight declined in March from February, while five increased. The gain on the month was led by basic metals and metal products as well as computer and electrical equipment.
Cambridge, England-based CSR Plc (CSR), a maker of products for the automotive navigation industry and digital cameras, said yesterday first-quarter revenue grew 5 percent from a year earlier and was ahead of its expectations.
In the three months through March, manufacturing fell 0.3 percent, the ONS said. From a year earlier, both manufacturing and total industrial production fell 1.4 percent in March.
Gains in production may be constrained by turmoil in the euro area, Britain’s biggest trading partner. The 17-nation region will shrink 0.3 percent this year, according to International Monetary Fund forecasts.
Surveys by Markit Economics published this month showed that services growth accelerated in April, while slumps in manufacturing and construction eased.
The Bank of England will probably vote for no change to quantitative easing today, according to 43 of 44 economists in a Bloomberg News survey. Officials will also leave the key interest rate at a record low of 0.5 percent, according to a separate poll. The central bank will announce the decision at noon in London.
To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at email@example.com