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Uk Industrial Production Weakens Sharply

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July 7 (Bloomberg) -- U.K. manufacturing unexpectedly contracted in May to the weakest in eight months, choked by record commodity prices and slowing economic growth.

Factory output fell 0.5 percent, compared with no change in April, the Office for National Statistics said today in London. Economists forecast stagnation, the median of 25 estimates in a Bloomberg News survey shows. The index of manufacturing production fell to 102.7, the lowest level since September.


"The outlook for the economy is clearly deteriorating and the risks of a recession are rising,'' said Nick Kounis, an economist at Fortis Bank NV in Amsterdam and a former U.K. Treasury official. ``The bank is still facing huge inflationary pressures. Rates will be on hold this week.''

Overall industrial production, including manufacturing, utilities, mining and oil and gas output, fell 0.8 percent on the month and 1.6 percent on the year, today's report showed.

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are we there yet?

Bearing in mind that these figures are looking into the past – and then consider the recent high street retail news, the PMI June surveys in both services and manufacturing, and record low mortgage approvals – then yes, I think it's highly probable that the UK economy is contracting at this very moment.

However I'm not sure yet whether we'll officially get into recession this year. There are some major revisions to the way the ONS calculates GDP coming in September, and according to an FT article last year this is going to bump up the UK's GDP. So we may have a situation where things look bad, everyone knows it's bad, but the Government are telling us that the economy is still doing okay.

Much like the US really...

Edit: missed word.

Edited by FreeTrader
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