Britain industrial production figures disappoint

Figures released Friday for British industrial production were disappointing, economists said. The pace of expansion in industrial production slowed in November compared with October, with total industrial output remained flat over the month, against a consensus expectation of 0.4 percent growth. However the annual growth rate hits 2.5 percent. The weak result was led by flat manufacturing output and a continuous decline in mining and quarrying production, down minus 2.2 percent month on month, with construction output also falling 4 percent. However, utilities output, energy and water, posted a significant rebound. The recent strength in the PMI survey continued to be at odds with official ONS statistics, said Apolline Menut of Barclays Economics Research. "The gap between the two increased with today's manufacturing outturn, calling for some caution when interpreting the strong message sent by surveys," she said. Contributions to production growth reveals that eight components contributed positively while seven were a drag on the sector, indicating a broad-based weakness, said Menut. "This broadly based weakness across sectors makes it less likely that there will be a strong rebound next month. This is particularly concerning given that overall industrial production has still to recover to its 2010 level," said Menut. James Knightley, chief Britain economist with ING Bank in London, told Xinhua Friday afternoon, "These figures are disappointing, especially in light of the data we have been having from the manufacturers themselves." Earlier this week, the British Chambers of Commerce (BCC) and the Purchasing Managers' Index (PMI) both recorded very high figures for current and future activity in industry. "These firms have been doing very well both domestically and in the export markets, the industrial output figures have been surprising," Knightley said that official British data at its first take did not always match with those from industry data, and would undergo later revisions and Industry data seemed to be more in tune with events than the official statistics. "What we tend to get is large upward revisions to growth later on," said Knightley, pointing to recent examples of significant upward revisions in GDP data. "I think the BOE may focus more on the industrial surveys because it is a direct link with businesses," said Knightley. "I put less weight on today's figures than on the almost universally positive figures we are getting from the business surveys. Deloitte's CFO series, for instance, suggested that manufacturing is picking up and optimism is picking up," he said. "That does not really tally with these soft figures," said Knightley. However, the disappointing figures may have some influence on policy makers on the BOE's Monetary Policy Committee, which sets the bank rate. Howard Archer, chief British and European economist with IHS Global Insight, said, "The disappointing industrial production and construction output figures for November are likely to reinforce belief with the BOE that interest rates need to stay down at 0.5 percent for some considerable time to come to give the economy every chance of developing broad-based sustainable growth." He added, "The data reinforce our view that the BOE will sit tight on interest rates through 2014 -- even if the unemployment rate gets down to 7 percent in the first half of the year -- and is unlikely to start raising interest rates before the second quarter of 2015."