A spate of disappointing economic data was released by the Office for National Statistics on Thursday, causing the value of sterling to sink.
Output in both the manufacturing and construction sectors fell in May, with manufacturing falling by 1.1 percent in the 3 months to May, the largest 3-month on 3-month fall since July 2015 and below market expectations.
Total real construction output also fell by 1.2 percent on both a monthly and 3-month on 3-month basis in May. The figure is now 2.9 percent below January’s recent peak and marks the second monthly decline in total real construction output.
The total trade deficit widened by £2.0 billion to £8.9 billion in the 3 months to May, driven by large increase in imports in March and then a further increase in May.
Commenting on today’s short-term indicator figures, ONS senior statistician Kate Davies said:
“Activity in the production sector was broadly unchanged in May, though the underlying position is weaker with both total output and manufacturing falling in the three months to May compared with the previous three months. Construction output also fell on a three-monthly basis, though this is after several years of growth.
“Meanwhile the total trade deficit widened by £2 billion in the most recent three months, primarily due to high imports especially from outside the European Union.”
However, reacting to the latest economic figures, Peter Dixon, an economist at Commerzbank, said: “It’s all building up a pattern here that says the economy is clearly losing momentum.
“It’s not pointing to a particularly dynamic second quarter. Under those circumstances, the timing of the hawks on the Monetary Policy Committee pushing for a rate hike doesn’t look great.”
Sterling is currently trading down 0.69 percent against the dollar and down 0.47 percent against the Euro.
