(menafn – ecpulse)
U.K. manufacturing production for the month of May and trade data beat estimates, yet the most recent data show the economy is signaling deterioration. Manufacturing production advanced 1.2%, the highest level in a year, from a revised of -0.8% and compared with forecasts of -0.1% after the government moved a public holiday for the queen’s Diamond Jubilee from May to June according to the ONS.
Industrial production also surged 1.0% from a revised of -0.4% and median estimates of -0.2%.
However, the data may be misleading as the most recent data showed further deterioration; manufacturing sector saw a contraction of 48.6 last month from 45.9 a month earlier while services recorded an ease in expansion to 51.3 in June from 53.3, providing signs recession may continue in the second quarter.
U.K. GDP first quarter posted 0.3% contraction which means the British economy has formally entered a technical recession after recording a similar contraction in the last quarter of 2011.
The weakening economic conditions stemming from the anemic consumer spending and the lingering European debt crisis have prompted policy makers to add to stimulus this month to bolster the economy.
The BoE nine-member panel decided to boost stimulus by 50 billion pounds while left interest rate at its low level of 0.50%.
Other data released today showed that visible trade deficit narrowed to 8363 million pounds from a revised of 9709 million pounds deficit.
In May, the pound advanced against the euro yet it retreated sharply against the U.S. dollar, but a recent report by the BCC showed that exports advanced on the back of the rise of oversees sales to emerging economies.
The outlook for the British economy remains full of uncertainty as it depends on the latest development in the euro area.
Meanwhile, the pound is trading slightly higher versus the U.S. dollar around 1.5530 after opening todays trades at 1.5525.
