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UK industrial output weaker than expected in June

Published 06/08/2014, 09:40
UK industrial output weaker than expected in June

LONDON,(Reuters) - British industrial output and manufacturing grew less than expected in June, failing to rebound completely from a sharp fall in May, official data showed on Wednesday.

Output for industry as a whole rose 0.3 percent in June, lagging a forecast of 0.6 percent in a Reuters poll of economists, and compared with a fall of 0.6 percent in May.

The data added to signs that Britain's economy is still being driven mostly by its massive services sector, again frustrating hopes for a more balanced recovery.

Wednesday's figures took growth in industrial output in the second quarter to 0.3 percent, slightly weaker than an estimate of 0.4 percent which the Office for National Statistics used in its first estimate of economic growth in the period.

The ONS said this did not change its earlier estimate of 0.8 percent economic growth in the second quarter.

Electricity and gas made the strongest positive contribution to industrial production in the second quarter - something the ONS said was likely a result of warm weather. But mining and quarrying output fell sharply.

On the year, industrial output was up 1.2 percent.

Britain's robust economic recovery has shown some signs of spreading beyond housing and consumer-facing sectors, with the biggest rise in business investment in two years during the first three months of this year.

The Bank of England has said it wants to be sure growth is on a firm basis before it raises interest rates from their record-low 0.5 percent, something most economists think will happen late this year or early in 2015.

The BoE starts a two-day policy meeting on Wednesday and is expected to keep rates on hold.

Last week, a survey of factory purchasing managers by data company Markit showed manufacturing grew at its slowest pace in a year in July, and the Confederation of British Industry also reported slowing orders.

© Reuters. Workers inspect components on the fuel inlet production facility in Foston

Manufacturing has further to go to catch up on its deep slump after the 2008 financial crisis. Factory output is still 7.4 percent below its peak, while services sector output is already well above its pre-crisis peak.

Manufacturing output rose 0.3 percent in June from May, lagging a Reuters poll forecast of 0.6 percent, and rose 1.9 percent on the year.

(Reporting by Andy Bruce and William Schomberg)

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