Economic woes heap pressure on Carney
The likelihood that interest rates will remain on hold increased yesterday after it emerged that output from Britain’s manufacturing and construction sectors fell in May.
Official figures showed manufacturing output had fallen 0.2 per cent month-on-month in May, down from 0.2 per cent growth in April and contrasting with economists’ expectations of a 0.3 per cent expansion.
The construction sector also endured a challenging month, failing to reverse April’s 1.1 per cent decline by dropping 1.2 per cent in May.
Industrial production output, which includes areas such as manufacturing, mining and quarrying, as well as energy and water supply, dipped 0.1 per cent when it was predicted to expand by 0.4 per cent.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the data increased the pressure on the Bank of England’s monetary policy committee to hold interest rates at 0.25 per cent.
Three members of the eightstrong MPC voted last month for a rise to 0.5 per cent but Bank governor Mark Carney recently stressed that “now is not yet the time to begin that adjustment”, while wages continue to stagnate and the impact of Brexit on the economy is unclear.
Tombs said: “May’s industrial production figures provide more evidence that GDP growth has not sped up in Q2, increasing the likelihood that the MPC stands pat next month.”
UK growth for the firsty quarter was confirmed at just 0.2 per cent last week.