UK industrial production improves more than expected - ONS
(ShareCast News) - UK industrial activity improved more than expected in June as manufacturing production and mining production improved.
The Office for National Statistics reported that overall industrial production rose 0.5% in June on the preceding month, stronger than the 0.1% that the agency had calculated in for its preliminary estimate for the second quarter, after May's production was revised to flat.
Manufacturing production in Jun was flat, as predicted, after falling 0.1% in May.
The ONS said the improvement in industrial production was largely driven by a strong rise in mining and quarrying, which was put down to the absence of maintenance that usually takes place in June.
Year on year, industrial production was surprisingly up 0.3% versus the consensus estimate for a fall of 0.1% following the 0.2% fall am month before, while UK manufacturing production rose 0.6% year-on-year, as expected, after a revised 0.3% increase in May.
UK construction output badly missed forecasts fell 0.1% month on month and rose 0.9% year-on-year.
REACTION AND ANALYSIS
The deluge of data from the ONS was a bit of a mixed bag, said economist Paul Hollingsworth at Capital Economics, with overall production boosted by one-off mining effects and manufacturing was flat on the month, with car production particularly weak, while construction output was much weaker than the ONS had pencilled in.
Meanwhile, he said trade data that was also reported by ONS on Thursday showed some "tentatively encouraging signs", with quarterly growth in export volumes stronger than the rise in imports, "suggesting that net trade probably made a small positive contribution to GDP growth", after exerting a drag in the first quarter.
"Looking ahead, surveys suggest that the manufacturing sector should gain some momentum in Q3, while export growth should pick up further. As a result, we remain optimistic that growth should hold up fairly well in the second half of the year, rather than slow."
Although the monthly trade balance deteriorated slightly, currency traders were paying more attention to the industrial production data and this pushed sterling higher, noted Naeem Aslam at Think Markets.
"The manufacturing number has improved and this confirms both sectors; manufacturing and production are not in that dire state which many were anticipating. However, before we stretch this any further, it is important that we see some more upbeat reading which confirms that we have a trend in place."