U.K. Industry Has Worst Quarter in Almost Three Yearsby
Production plunges 1.1% in December compared with November
Output drop in fourth -quarter period revised to 0.5%
U.K. industrial production plunged more than economists forecast in December, capping its worst quarterly performance in almost three years.
Output dropped 1.1 percent in December from November, the Office for National Statistics said in London on Wednesday. Economists had forecast a fall of 0.1 percent on the month. The decline was led by a 5.4 percent drop in electricity and gas production, which was affected by warmer-than-usual weather.
In the fourth quarter, production fell 0.5 percent, the most since the quarter ended January 2013. That’s bigger than the 0.2 percent decline included in last month’s first estimate of gross domestic product for the period.
While the impact is less than 0.1 percentage point, economists said there is now a risk that growth will be revised down from 0.5 percent when the ONS publishes its second estimate of GDP on Feb. 25. That will depend on the performance of services during the quarter, as well as construction.
“A pretty nasty set of data –- it is very difficult to find any positives,” said Howard Archer at IHS Global Insight in London. The report will “fuel concerns about the U.K. economic outlook as well as the unbalanced nature of growth. It will also likely harden views that the Bank of England will not be raising interest rates during 2016.”
The December data also showed that manufacturing output fell 0.2 percent from the previous month, a third consecutive drop. From a year earlier, it dropped 1.7 percent, the most since 2013.
Total production is about 10 percent below its pre-crisis peak in early 2008, and the data highlight the unbalanced nature of U.K. growth, which remains dependent on domestic demand and services. Figures published Tuesday showed net trade likely dragged on the economy in the fourth quarter.