| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Industrial Production - M/M | 0.1% | 0.8% | 0.2% | 0.3% |
| Industrial Production - Y/Y | -1.4% | 0.4% | ||
| Manufacturing Output - M/M | 0.1% | 1.1% | 0.4% | 0.3% |
| Manufacturing Output - Y/Y | -1.5% | 0.6% | 0.4% |
Highlights
Goods production was surprisingly robust at the end of the second quarter. Output expanded fully 0.8 percent on the month, easily beating the market consensus and following a slightly larger revised 0.3 percent increase in May. June's advance was the largest since February but with base effects strongly negative, annual growth still declined sharply from 0.4 percent to minus 1.4 percent.
Manufacturing fared even better, posting a 1.1 percent monthly rise after a slightly smaller revised 0.3 percent increase in May. Some nine of its 13 subsectors recorded gains, notably coke and refined petroleum products (4.2 percent), electrical equipment (4.4 percent) and machinery and equipment not elsewhere classified (3.9 percent).
Meantime, total industrial production was also boosted by advances in water supply and sewerage (2.2 percent) and electricity and gas (2.5 percent).
However, despite the buoyancy of the June data, second quarter industrial production still dipped 0.1 percent versus the first quarter. This was its first negative 3-monthly change since January. On the same basis, manufacturing was down a steeper 0.6 percent. Consequently, goods production had a small negative effect on second quarter GDP growth and the recovery still needs to gain traction. Today's data put the UK RPI at minus 15 and the RPI-P at minus 4. In general, economic activity is falling slightly short of market forecasts.
Manufacturing fared even better, posting a 1.1 percent monthly rise after a slightly smaller revised 0.3 percent increase in May. Some nine of its 13 subsectors recorded gains, notably coke and refined petroleum products (4.2 percent), electrical equipment (4.4 percent) and machinery and equipment not elsewhere classified (3.9 percent).
Meantime, total industrial production was also boosted by advances in water supply and sewerage (2.2 percent) and electricity and gas (2.5 percent).
However, despite the buoyancy of the June data, second quarter industrial production still dipped 0.1 percent versus the first quarter. This was its first negative 3-monthly change since January. On the same basis, manufacturing was down a steeper 0.6 percent. Consequently, goods production had a small negative effect on second quarter GDP growth and the recovery still needs to gain traction. Today's data put the UK RPI at minus 15 and the RPI-P at minus 4. In general, economic activity is falling slightly short of market forecasts.
Market Consensus Before Announcement
Both manufacturing output and industrial production are expected to increase 0.1 percent versus May.
Definition
Industrial production measures the physical output of the mining and quarrying, manufacturing, gas and electric, and water supply and sewerage sectors. Manufacturing is seen as the best guide to underlying developments as the other subsectors can be highly volatile on a short-term basis. Estimates are largely based on a monthly business survey of roughly 6,000 companies.
Description
Industrial and manufacturing outputs are watched carefully by market participants despite the decline in the importance of manufacturing in the UK economy. Manufacturing output is the preferred number rather than industrial production which can be unduly influenced by electrical generation and weather. The manufacturing index is widely used as a short-term economic indicator in its own right by both the Bank of England and the UK government. Market analysts also focus on manufacturing and its sub-sectors to get insight on industry performance.
Industrial production accounts for less than 16 percent of the economy within which the key manufacturing sector is worth about ten percentage points. Total manufacturing is divided into thirteen sub-sectors, ranging from food, drink and tobacco through chemicals and chemical products to electronics and transport equipment. Consequently, this report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.
Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.
Industrial production accounts for less than 16 percent of the economy within which the key manufacturing sector is worth about ten percentage points. Total manufacturing is divided into thirteen sub-sectors, ranging from food, drink and tobacco through chemicals and chemical products to electronics and transport equipment. Consequently, this report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.
Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.
