British Industrial Output Falls Unexpectedly

By Wiktor Szary and Jason Douglas Features Dow Jones Newswires

U.K. industrial production shrank unexpectedly in May, data showed, as manufacturing output declined and warm temperatures reduced demand for energy, signaling economic growth failed to pick up in the second quarter after a sluggish start to the year.

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In monthly terms, production shrank 0.1% in May, according to Office for National Statistics data published Friday, disappointing the expectations of analysts polled by The Wall Street Journal, who forecast 0.3% growth.

Factory output fell by 0.2% on the month, against analysts' expectations of 0.3% growth.

The fall in manufacturing output was driven largely by a decrease in production of transport equipment, as well as a declining food, beverages and tobacco production.

Compared with the same month last year, industrial output was down 0.2%, missing market expectations of 0.2% growth. Annual growth in manufacturing also disappointed, with factory output growing by a mere 0.4%, 0.5 points less than forecast.

Separately, the ONS said the U.K.'s trade deficit in goods widened in May, and stood at GBP11.9 billion ($15.4 billion), up from GBP10.6 billion the previous month and nearly a billion more than expected by analysts.

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As accelerating inflation squeezes consumer spending-for years a key engine of U.K. growth-economists say that production and trade will have to make a bigger contribution to stave off an economic slowdown.

The quarterly economic growth in the first three months of the year stood at 0.2%, significantly below the 0.7% quarterly rate seen in the last quarter of 2016.

Write to Wiktor Szary at Wiktor.Szary@wsj.com and Jason Douglas at jason.douglas@wsj.com

(END) Dow Jones Newswires

July 07, 2017 05:05 ET (09:05 GMT)