United Kingdom manufacturing output falls in May

Minister Theresa May arrives on the first day of the G-20 summit in Hamburg northern Germany Friday

United Kingdom manufacturing output falls in May

United Kingdom industrial production declined 0.1% in May compared with expectations of 0.3% growth on the month and there was an annual decline of 0.2% compared with expectations of a small increase.

The output data comes on the heels of bullish sentiment indicators such as the Ifo index, which showed business morale hit a record high in June.

However, reacting to the latest economic figures, Peter Dixon, an economist at Commerzbank, said: "It's all building up a pattern here that says the economy is clearly losing momentum".

Economists said the figures suggest any rebound in growth from the first quarter will be muted and could delay an interest rate hike by the Bank of England, which is increasingly anxious about import price increases stoked by the pound's sharp fall in value since last year's Brexit vote.

Output in the sector also fell 1.2 per cent in the three months to May, its fourth quarterly fall in a row, and its biggest drop since September 2012.

"The sector is now set to grow by 2 percent in the second quarter - we haven't seen anything like this since 2010", Bankhaus Lampe economist Alexander Krueger said. "Under those circumstances, the timing of the hawks on the Monetary Policy Committee pushing for a rate hike doesn't look great". Manufacturing output dropped by 0.2% compared with April - hit by a 4.4% drop in auto production.

"Instead of a cliff edge, the United Kingdom needs a bridge to the new European Union deal", said Carolyn Fairbairn, director-general of the Confederation of British Industry.

In a further blow, United Kingdom construction output fell by 1.2pc in May and by 0.3pc on the year, which the ONS blamed on "falls in both fix and maintenance, and all new work".

Separately on Friday, mortgage lender Halifax said house prices rose at the slowest annual pace in four years, which could erode consumer confidence.

Other gloomy news from today come from trade data, as the UK's deficit in goods and services - the gap between exports and imports - widened by £1billion to £3.1billion between April and May, with economists' expecting a figure for £2.5billion.

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