U.K. June Industrial Output Rose as Manufacturing Surged
U.K. industrial production rebounded more than economists forecast in June as manufacturing surged the most in a year, adding to signs of a strengthening recovery.
Industrial output increased 1.1 percent from May after stagnating for three months, the Office for National Statistics said today in London. Economists forecast a 0.7 percent increase, according to the median of 33 estimates in a Bloomberg News survey. Factory output jumped 1.9 percent, also exceeding economists’ forecasts.
After expanding 0.6 percent in the second quarter, the U.K. economy is showing signs of gaining traction, with manufacturing and construction and services all strengthening in July and house-prices rising. Bank of England Governor Mark Carney will tomorrow present the central bank’s new economic forecasts as well as officials’ assessment of using forward guidance.
“The strength in manufacturing could be a sign that what has so far been a sugar rush of low interest rates and rising house prices is broadening out to more sustainable sources of growth,” said Rob Wood, an economist at Berenberg Bank in London and a former U.K. central bank official. “The BOE’s job is to ensure the stimulus is not withdrawn prematurely and this recovery continues to blossom.”
The pound rose 0.1 percent to $1.5373 against the dollar as of 10:45 a.m. in London. It was little changed versus the euro, at 86.40 pence.
In the three months through June, total production increased 0.6 percent from the previous quarter, matching the estimate in the gross domestic product report on July 25. The ONS said today’s data will have no impact on the GDP estimate. Manufacturing rose 0.7 percent in the period, the most since December 2010.
On a monthly basis, the increase in manufacturing was led by transport equipment, up 5.3 percent, other manufacturing and repair, and computer and electronic products. All 13 categories within manufacturing recorded an increase in June. That’s the first time that has happened since June 1992.
Within production, mining and quarrying increased 0.7 percent in June from May, while water supply and sewage treatment rose 2.3 percent. Electricity and gas output fell 5.8 percent. From a year earlier, total industrial production increased 1.2 percent in June and manufacturing rose 2 percent.
A report today from Halifax showed that U.K. house prices rose for a sixth month in July. Home values increased 0.9 percent from the previous month to an average 169,624 pounds ($260,800), it said in a statement in London today.
The improvement in U.K. industry measures in the past week prompted Royal Bank of Canada economist Jens Larsen to raise his forecast for GDP growth this year to 1.4 percent from 1.2 percent. Macclesfield, England-based Bodycote Plc (BOY), a provider of thermal processing services, said July 25 first-half revenue rose 5 percent and that it expects “modest” progress for the full year.
The BOE will publish its projections for growth and inflation at 10:30 a.m. tomorrow in London. It left its bond-purchase plan on hold at 375 billion pounds last week and its key rate at a record low 0.5 percent.
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