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UK July industrial production rises by most since 1987 -UPDATE

Date: Friday 07 Sep 2012

UK July industrial production rises by most since 1987 -UPDATE

Industrial production in the United Kingdom rose by 2.9 per cent month-on-month (0.8 per cent year-on-year) in July, according to the Office for National Statistics (ONS).

That is its strongest one month increase since February 1987 no less.

The consensus estimate had been for an increase of 1.5% month-on-month (-2.8% year-on-year).

Manufacturing production increased by 3.2% month-on-month (-0.5% year-on-year).

In terms of quarter-on-quarter rates of change industrial production was flat while manufacturing sector output was up by 0.2%.

In mining&quarrying production grew by 4.9% while in the water & waste management sector it did so by 1.6%. These increases were slightly offset by the electricity, gas, steam & air conditioning sector, where output declined by 0.2%.

Production in the water supply and waste management sector grew by 1.6% month-on-month, while activity in oil and gas extraction improved by 5.7%.

Users should be cautious when interpreting movements involving June 2012 due to the changes in public holidays as a result of the Queen’s Diamond Jubilee, the ONS has pointed out. That is because this year the month of June had two extra holidays.

Revisions



The largest revision to quarterly index of production growth is in 2012 quarter one, which is revised from -0.5% to -0.2%. This revision is estimated to add 0.05 percentage points to 2012 quarter 1 Gross Domestic Product quarterly growth, ONS explains.

Modest up-trend expected next year



Commenting on today´s data economists at Barclays are saying that: “For Q3 as a whole, we expect a positive reading for industrial and manufacturing output, but we think this will be mainly a rebound after the Jubilee-related weakness observed during the previous quarter. (…) The manufacturing PMI survey, which we would expect to be less prone to volatilities related to extra working days given its qualitative nature, has painted a subdued picture of the manufacturing sector. Beyond these volatile quarters, we expect industrial output to resume a measured upward trend next year.”

AB

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