LONDON (Reuters) – British industrial output expanded at the fastest pace in six years during the three months to May, suggesting the sector was on track to contribute to economic growth before the vote to leave the EU.
Industrial output rose 1.9 percent in the three months to May compared with the previous three months, the strongest increase since May 2010 and reflecting strong growth in April.
In May alone, industrial output slipped 0.5 percent, a smaller decrease than the 1.0 percent drop forecast in a Reuters poll of economists.
These figures are likely to be viewed mostly as moot by financial markets after Britain’s decision last month to leave the EU, which sent the currency tumbling and has raised fears the country will fall into recession or suffer years of weak growth.
Still, for industrial output to drag on economic growth it in the second quarter, it would have to plummet at least 6.0 percent in June alone – something that has not happened since 1979, the ONS said.
Industrial output fell 0.2 percent in the first quarter, a slightly smaller decrease than the latest economic growth figures suggested.
Britain’s overall economy slowed in the first quarter, with the pace of growth easing to 0.4 percent compared with 0.7 percent in the previous three months.
Manufacturing output also fell 0.5 percent month-on-month, again a smaller decrease than economists had expected. The pharmaceutical sector, which surged in April, was one of the main drags.
A series of surveys of businesses from Markit/CIPS published last week suggested economic growth was on course to slow to just 0.2 percent in the April-June period, with most of the data collected before the June 23 referendum.
British manufacturing expanded at the fastest pace in five months in June before Britons voted to leave the European Union last week, according to the Markit/CIPS survey conducted almost entirely before the historic referendum. [GB/PMIM]
The Bank of England has said economic data are likely to be volatile and tricky to interpret around the referendum.
The BoE will probably wait until August to make any policy move to offset the hit to the economy from Britain’s decision to leave the European Union, but the pound has more pain ahead, a Reuters poll showed on Tuesday.