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Recession fears as industrial output falls
Source: Agencies |
March 13, 2013, Wednesday
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BRITISH industrial production fell sharply in January, official figures showed yesterday, raising fears that the country will suffer its third recession in not much more than four years.
The Office for National Statistics said industrial production dropped a monthly rate of 1.2 percent from December, in contrast to expectations for a 0.2 percent rise. Industrial output includes manufacturing, as well as sectors such as construction and oil and gas production, and accounts for around 20 percent of the British economy, which is Europe's third-largest.
The pound fell sharply on the news as traders think it's more likely now that the Bank of England will back another monetary stimulus in the months ahead. At one point, the pound fell to US$1.4830, its lowest level since June 2010, from US$1.4905 just before the figures were released. It has since settled around the US$1.4860 mark. The industrial figures are the latest in a series of downbeat indicators suggesting that Britain's gross domestic product, or GDP, may shrink again in the first quarter of 2013.
If it does so, the country would be in its third recession, defined as two consecutive quarters of economic contraction, since the end of 2008. "Overall, a dire set of UK data," said Ross Walker, an economist at the Royal Bank of Scotland. "The slump in industrial production in January leaves a decline in Q1 GDP looking more likely than not."
Over the past few months, the Bank of England has held off from boosting its stimulus program.
The Office for National Statistics said industrial production dropped a monthly rate of 1.2 percent from December, in contrast to expectations for a 0.2 percent rise. Industrial output includes manufacturing, as well as sectors such as construction and oil and gas production, and accounts for around 20 percent of the British economy, which is Europe's third-largest.
The pound fell sharply on the news as traders think it's more likely now that the Bank of England will back another monetary stimulus in the months ahead. At one point, the pound fell to US$1.4830, its lowest level since June 2010, from US$1.4905 just before the figures were released. It has since settled around the US$1.4860 mark. The industrial figures are the latest in a series of downbeat indicators suggesting that Britain's gross domestic product, or GDP, may shrink again in the first quarter of 2013.
If it does so, the country would be in its third recession, defined as two consecutive quarters of economic contraction, since the end of 2008. "Overall, a dire set of UK data," said Ross Walker, an economist at the Royal Bank of Scotland. "The slump in industrial production in January leaves a decline in Q1 GDP looking more likely than not."
Over the past few months, the Bank of England has held off from boosting its stimulus program.
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