Manufacturing resilient as inflation fears grow
Source: Agencies |
June 12, 2010, Saturday
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Print Edition
Print Edition
BRITISH economic indicators continued to give mixed signals yesterday as manufacturing showed signs of resilience but a separate survey detected growing concern among consumers about inflation.
Manufacturing output fell 0.4 percent in April from March, but was still 3.4 percent higher than a year earlier, the Office for National Statistics said. The monthly decline also followed a 2.2 percent jump in March.
The broader index of production, which includes mining and energy production, was up 2.1 percent from a year ago, despite a drop of 0.4 percent from March.
"Even if output were to remain flat in May and June, quarterly manufacturing output growth in Q2 would still be a very healthy 1.7 percent," said Hetal Mehta, senior economic adviser to the Ernst & Young ITEM Club.
"Manufacturers are rebuilding their stock levels. In addition, the pound remains weak and is continuing to support UK competitiveness," Mehta said.
Output of motor vehicles was up 28 percent on the year and production of power machinery was up 30 percent.
However, a survey by the Bank of England, which asked respondents to guess the current rate of inflation and the rate over the coming year, showed mounting fears that consumer prices will rise.
The median expectation of inflation over the coming year was 3.3 percent, compared with 2.5 percent in February.
The current inflation rate was seen at 3.6 percent, up from 3.3 percent in February and just shy of the latest official estimate of 3.7 percent registered for April, a 17-month high.
The bank, which has an inflation target of 2 percent, held the survey in May.
Manufacturing output fell 0.4 percent in April from March, but was still 3.4 percent higher than a year earlier, the Office for National Statistics said. The monthly decline also followed a 2.2 percent jump in March.
The broader index of production, which includes mining and energy production, was up 2.1 percent from a year ago, despite a drop of 0.4 percent from March.
"Even if output were to remain flat in May and June, quarterly manufacturing output growth in Q2 would still be a very healthy 1.7 percent," said Hetal Mehta, senior economic adviser to the Ernst & Young ITEM Club.
"Manufacturers are rebuilding their stock levels. In addition, the pound remains weak and is continuing to support UK competitiveness," Mehta said.
Output of motor vehicles was up 28 percent on the year and production of power machinery was up 30 percent.
However, a survey by the Bank of England, which asked respondents to guess the current rate of inflation and the rate over the coming year, showed mounting fears that consumer prices will rise.
The median expectation of inflation over the coming year was 3.3 percent, compared with 2.5 percent in February.
The current inflation rate was seen at 3.6 percent, up from 3.3 percent in February and just shy of the latest official estimate of 3.7 percent registered for April, a 17-month high.
The bank, which has an inflation target of 2 percent, held the survey in May.
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