UK Manufacturing Output Connected to Interest Rate Adjustment
Manufacturing and housing sectors within the UK economy have great influence over the big picture and the positives or negatives which are experienced tomorrow. That being said, the manufacturing sector has just gone through an enigma of sorts during the month of May. It seems the ONS estimated an increase in the output of manufacturing at 0.4%. Output actually fell a total of 1.3%
This is the first decline since January and was quite unexpected. Data from Germany and Japan regarding output in the month of May is similarly weak.
Samuel Tombs of Capital Economics commented on the figures, saying: “There is still a good chance that the overall recovery gathered pace in the second quarter.”
Howard Archer of IHS Global Insight commented on the result of ouput decline in May and the effect it will have on interest rates which will subsequently affect the housing market, saying: “With Mark Carney stressing that the strength of data will drive when the Bank of England will first edge up interest rates, the disappointing May industrial production data will likely be seen as supportive to the Bank holding off from raising interest rates until 2015.
“However, it is still a close call as to when the Bank first moves on interest rates and there will undoubtedly be many swings in expectations over the coming weeks and months. At least we can be pretty sure that the Bank of England will sit tight on monetary policy when the July MPC meeting ends on Thursday.”