Unexpected decline in Industrial output in June

The overall industrial output was trimmed down by 0.1 percent in June to settle at 0.7 percent lower than last year.

London (loans-bazaar) August 7, 2006: The Office for National Statistics revealed figures on Monday according to which from May to June, industrial output fell by 0.1 percent, i.e., 0.7 percent lower than last year.

This decline came out of the blue, since predictions by economists had expected a 0.3 percent rise on the month. But according to ONS, the new figures would expectedly trim only 0.02 percent points off the estimated 0.8 percent GDP growth in the second quarter.

The chief reason for this decline was that Britain's oil and gas energy sectors were going through maintenance work in June, along with the main gas inter-connector which experienced a two-week shutdown with mainland Europe.

A hosepipe ban in south east England had caused lower water output. Unusually warm temperatures increased demand for electricity. According to ONS, electricity figures may boost further in July due to air conditioning demand owing to very hot weather.

Alan Clarke, economist at BNP Paribas said "Next month's output data will be more interesting given the heat wave."

A weak trend was observed in manufacturing output as well, which rose by 0.1 percent, thereby defying the prediction of 0.2 percent raise. However, as compared to last year, the factory output was 0.9 percent higher.

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