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Manufacturing Loses Pace

Written By On 10/01/2014

Britain's production output went up by two and a half per cent in November compared to twelve months previously. However it remained stagnant in the weeks between October and November 2013 according to the Office for National Statistics.

These figures relate mainly to manufacturing, which is the majority used in equating the data, plus mining, water supply, sewerage, and waste management.

Productivity in construction decreased by four per cent within the same few weeks, which was the worst decline for over a year. This was in stark contrast to the performance up until then, but this is an sector that is capable of doing this.

Overall the numbers made for some disappointing reading, especially as most economists were predicting output to increase.

This report has not only put a dark shadow on the latest economic recovery, but has caused anxiety concerning interest rate hikes.

UK Economist Samuel Tombs from Capital Economics still felt positive about the recovery though, but he was gave warnings of caution concerning the next GDP quarter.

He commented:

November's weak industrial production figures signal that GDP growth in the fourth quarter is unlikely to be quite as strong as the business surveys have indicated. Looking ahead, 2014 should be a year of continued expansion in industrial production.

Chief UK economist David Tinsley at BNP Paribas was of a similar opinion. He said the ONS figures were 'unambiguously poor', but still felt positive that all the economic signs are 'broadly encouraging'. He believed the current set of data will prevent 'over exuberant rate hike expectation'.

British Chambers of Commerce chief economist David Kern called the latest figures 'disappointing', but is also still encouraged. He said:

Longer term comparisons show solid annual growth. It is a timely reminder that should also dampen the clamour for an early rise in interest rates.