"It is quite possible that the fall today reflects some erratic/seasonal influences"
- David Tinsley, UK economist at BNP Paribas
Britain's factory production unexpectedly fell on the month in May, while industrial output also declined, official data showed, raising questions about the country's recovery pace. According to the Office for National Statistics, manufacturing output slumped 1.3% in May, posting the biggest drop since January 2013 and against economists' projections for a 0.4% rise. The drop comes after the sector enjoyed its strongest growth in almost four years in the three months to April. May's decline in output echoes a similar fall in German industrial production, which dropped 1.8%.
The broader measure of U.K. industrial production declined 0.7% in May from April, the biggest drop since August last year, while on annual basis, industrial output grew 2.3%. The ONS said that the monthly declines in the U.K.'s industrial sector are not a sign of the economy's weakness. However, the drop is likely to suggest a slowdown in the pace of growth among British manufacturers in the second quarter. The Pound weakened slightly following the release of the manufacturing figures, as markets saw less chance of an interest rate increase before the end of the year. The Sterling lost 0.2% versus the U.S. counterpart to trade at 1.7094, compared to 1.7133 ahead of the data release.
© Dukascopy Bank SA