- Posted by Shyam Gokani in Bank of England, Brexit, Currency, Economy, EUR, Mark Carney, Sterling, UK
- September 7, 2016
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British manufacturing output fell in July at the fastest pace in a year, confirming earlier signs that factories took an immediate hit after the vote to leave the European Union, official data showed on this morning.
Overall industrial output unexpectedly rose thanks to strong oil and gas production, the Office for National Statistics said.
Output in manufacturing fell 0.9 percent following a 0.2 percent drop in June. Economists polled had expected manufacturing output to fall 0.4 percent in July.
Earlier data showed Germany industrial production posted its steepest fall in 23 months in July. Economists said the German figures probably reflected concerns about the consequences of Britain’s decision to leave the EU.
The ONS said British industrial output in July unexpectedly rose 0.1 percent on the month after stagnating in June, helped by oil and gas. Economists polled by Reuters had expected it to edge down 0.2 percent.
Despite signs that consumers have mostly shrugged off the Brexit vote, the economy looks set to slow in the third quarter. The Bank of England said last month it expected to cut interest rates again later this year.
Sterling edged down against the dollar but stayed close to the seven-week high it had hit the yesterday, as investors awaited testimony from the head of the Bank of England for clues on whether interest rates may be cut again.
BoE Governor Mark Carney will at 1315 GMT have to answer questions from parliamentarians about whether the central bank overreacted in its monetary easing last month, and will be watched for clues on possible further action.
A majority of economists believe the BoE will hold fire in September but will cut rates by a further 15 basis points at its November meeting.