British Industrial, Manufacturing Production Fall
England's economy showed further signs of recession on Tuesday, as economic data showed that industrial production and manufacturing production both fell in June. The data might be weak as factories shut down for the London Olympic Games, and there could have been some seasonal factors such as summer shutdowns of factories weighing on the data.
Industrial production in England fell 2.5 percent in June, slower than the 1 percent rate of expansion witnessed in May. The data beat economist expectations of a 3.4 percent drop in industrial production. On an annualized basis, industrial production fell 4.3 percent from the year before, slower than the previously reported annualized rate of a 1.8 percent contraction but better than economist expectations of a 5.0 percent drop.
The drop in industrial production is mirrored by the drop in manufacturing production. Manufacturing production fell 2.9 percent in June, well below the 1.2 percent rate of growth seen in June. However, the data also beat economist expectations of a 4.1 percent drop in production.
The slowdown in output does not bode well for England's economy. The Olympic Games may be to blame, as factories shut down due to the mass influx of tourists at the end of the month. Also, some factories may have shut down for summer breaks, so some of the month-over-month drop could be explained by that.
England is officially back in recession following multiple quarters of negative GDP growth and further declines are expected in the third quarter. Weighing on the economy are austerity measures from budget cuts and a prolonged slowdown in the Eurozone. Exports to Eurozone countries have fallen as final demand in the single currency zone falls.
British stocks fell on the weak data and the benchmark FTSE 100 fell on the news, but has since recouped losses and rose 0.11 percent as of writing.
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