Tags: united kingdome | factories | output | economic recovery

UK Factories Boost Output Amid Signs of Economic Recovery

Friday, 06 Sep 2013 07:08 AM

U.K. manufacturing production rose for a second month in July, adding to signs of an accelerating economy that has led investors to bet the Bank of England will increase interest rates earlier than it has projected.

Factory output rose 0.2 percent from June, when it gained 2 percent, the Office for National Statistics said in London. The increase was in line with the median forecast of 23 estimates in a Bloomberg News survey. Industrial output was unchanged as warm weather reduced demand for energy.

The data add to evidence the economy is gaining pace after business surveys this week showed services and construction at their strongest since the financial crisis last month and manufacturing at a 2 1/2 year high. The 10-year gilt yield climbed above 3 percent for the first time since 2011 as the Bank of England left policy unchanged without an explanatory statement.

“Manufacturers will be hoping that the recent extended good news on the U.K. economy further lifts business and consumer confidence which in turn translates into sustained higher demand,” Howard Archer, an economist at IHS Global Insight in London, said before the data were released. “Although global economic conditions are still challenging, the prospects for U.K. manufacturing export orders are being helped by the euro zone finally exiting recession.”

Weather Boost

Warm temperatures in July boosted demand for beverages as well as water to fill paddling pools and water gardens, the ONS said. At the same time, it damped demand for gas and electricity, with utilities output falling by 2.2 percent on the month.

The pound erased gains against the dollar after the data were released and was trading at $1.5584 as of 9:34 a.m. London time, down 0.1 percent on the day. The 10-year gilt yield was down 2 basis points at 2.99 percent.

The risks to the recovery were highlighted in a separate report showing Britain’s goods-trade deficit widened to 9.85 billion pounds, the most since October last year. Exports fell 7.6 percent, with shipments to nations outside the European Union plunging 16 percent. Overall imports declined 1 percent.

The drop in sales to non-EU nations was led by finished manufacturing, machinery and transport gear and aircraft, the ONS said.

The economy saw expansion across all sectors in the second quarter, and a 0.9 percent in industrial production in the three months through July may boost expectations investment will again contribute to growth in the third quarter.

The widening of the trade deficit casts doubt on the contribution of net trade. Between May and July the overall deficit including services widened to 6.14 billion pounds from 5.84 billion pounds in the period through April.

The Organization for Economic Cooperation and Development lifted its 2013 U.K. growth forecast this week to 1.5 percent from 0.8 percent, with a 0.9 percent expansion in the current quarter.


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U.K. manufacturing production rose for a second month in July, adding to signs of an accelerating economy that has led investors to bet the Bank of England will increase interest rates earlier than it has projected.
united kingdome,factories,output,economic recovery
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2013-08-06
Friday, 06 Sep 2013 07:08 AM
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