UK industrial production, construction output and trade performed poorly in May
UK industrial production, construction output and trade all dropped more than expected in May, according to data by the Office for National Statistics (ONS).
Industrial production fell by 0.1 per cent in May compared with the previous month, falling short of expectations of 0.2 per cent growth. In April, output dropped 0.8 per cent. Manufacturing output dropped by 0.2% compared with April – hit by a 4.4% drop in car production.
Construction output dropped more than expected too, falling by 1.2% in May from April. Output in the construction sector dropped 1.2% in the three months to May.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics said: “The construction sector now is feeling acutely the adverse impact of Brexit uncertainty on the willingness of households and firms to make long-term financial commitments.
“It’s extremely unlikely that overall GDP growth accelerated in Q2 to the extent required to convince the Monetary Policy Committee (MPC) that higher interest rates are needed immediately.”
Separate data from the ONS revealed that the UK’s trade deficit also widened last month. The deficit including trade-in services widened by £1bn to £3.1bn in May, despite a pick-up in export volumes.
The weak economic data suggests that the British economy is losing momentum and economists are now less convinced that the Bank of England will raise interest rates over the coming months.
Peter Dixon, an economist at Commerzbank, was quoted by the BBC as saying: “It’s all building up a pattern here that says the economy is clearly losing momentum.
“It’s not pointing to a particularly dynamic second quarter. Under those circumstances, the timing of the hawks on the Monetary Policy Committee pushing for a rate hike doesn’t look great.”
According to Reuters, analysts said that the UK economy was now unlikely to recover much speed in the second quarter of 2017, after growth of just 0.2 percent in the first quarter.