UK industrial output fell unexpectedly in June, the latest official figures revealed yesterday.
The Office for National Statistics (ONS) said industrial output fell 0.5 per cent in June, partially reversing May’s 0.7 per cent rise, rubbishing forecasts for a 0.2 per cent increase.
Sterling fell half a cent against the dollar in response.
The ONS statement said the main reason for the fall was a 6.0 per cent drop in oil and gas output – its biggest monthly fall since last August – due to maintenance work being carried out in June, rather than in August when work on oil fields is normally done.
However, the ONS added that yesterday’s results would not lead to any revision of the second quarter GDP figures, which showed growth of 1.1 percent for the economy as a whole.
The pound fell as investors speculated that the Bank of England would keep interest rates at their record low 0.5 per cent for some time to come.
Warning of fears that ‘manufacturing will lose momentum’ Howard Archer, economist at IHS Global Insight, said: ‘There are hints that the second quarter may have been the peak of manufacturing activity. And certainly the inventory adjustment will probably soon come to an end.’
Manufacturing output also rose less than expected in June, by 0.3 per cent, the same as in May.
The ONS also published data showing that annual factory gate inflation slowed less than expected in July to 5.0 per cent from 5.1 per cent, after a monthly rise in food prices outweighed a drop in petrol costs.
Food prices are set to rise further, following fires in Russia which have seen the country ban wheat exports.
This has driven US wheat futures prices to a 23-month high.
Input price inflation picked up less than expected, however, at a rate of 10.8 percent from 10.7 per cent in June.
Analysts had expected producer output price inflation of 4.9 per cent and input price inflation of 11.4 percent.
• Total US non-farm payroll employment declined by 131,000 in July, and the unemployment rate was unchanged at 9.5 per cent, the US Bureau of Labour Statistics reported yesterday.
The number of unemployed persons, at 14.6 million, was unchanged in July, as was the number of long-term unemployed (those jobless for 27 weeks and over) at 6.6 million. These individuals made up 44.9 per cent of unemployed persons.
The number of persons employed part time for economic reasons was essentially unchanged over the month at 8.5 million.
About 2.6 million persons were marginally attached to the labour force in July, an increase of 340,000 from a year earlier.
They were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.
