"It's disappointing, and suggests that underlying growth is somewhat weaker than many may have expected"
- Philip Rush, an economist at Nomura International Plc
Britain's manufacturing production unexpectedly shrank in May, due to a drop in output of pharmaceuticals and metals, raising doubts about the health of recovery and its sustainability to gain pace in the upcoming months. On Tuesday data from the Office for National Statistics showed that the U.K. factory output dropped 0.8% from April, when it lost 0.2%, below analysts' expectations for a 0.4% gain. The overall industrial production was flat, supported by an increase in oil and gas production. At the same time, the extraction of oil and gas were among the main downward GDP drivers during the final three months of 2012, when output in mining and quarrying tumbled 10.3%.
Also Tuesday a report from the Office for National Statistics unveiled that the nation's gap on trade in goods and services narrowed more than initially was expected in May. The U.K. deficit on trade in goods and services, which is considered as a key contributor to the overall economic output, recorded a drop of 2.4 billion pounds in the last month of spring, however still higher than the revised 2.1 billion in a month earlier. Analysts, however, expected a 2.6 billion reading. Even despite an increase in volumes of both exports and imports, trade prices have risen at the beginning of 2013, mainly due to the lower prices of domestic currency.
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