CCR Magazine

The UK economy, it seems, can’t catch a break. Data released this morning has shown a sharp fall in output for UK manufacturing.

Figures revealed a 0.9% drop in production in January, against expectations of a 0.3% rise. It also marks a stark difference from December’s data, which showed a surprise 0.9% expansion in the sector, supporting UK economic growth in the final quarter of last year. Today’s figure marks the steepest fall since August 2009 and will renew concerns that the UK economy could dip back into negative growth.

Duncan Higgins, senior analyst at Caxton FX commented, “As with UK retail sales, the icy weather in January has clearly dented production. Though even with this as an excuse, the data is clearly hugely disappointing, falling more than a percent short of expectations. Of real concern now is the prospect of economic contraction, with the industrial sector also producing a negative figure for the month.”

“Following hot on the heels of yesterday’s weak trade balance figure, the prospects for the UK recovery are not particularly uplifting at present. It is hard now to envisage the Bank of England not resurfacing the possibility of additional stimulus measures in order to prevent the economy recovery from derailing,” continued Higgins.

In response, sterling has hit its weakest level against the euro since December 1st 2009. The pound is also losing further ground to the US dollar, down a further cent in trading today with the price now below 1.49.

(Source - Caxton FX Press Release)