Weak output data not 'good case' to trigger rate cuts
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Factory output rose 0.3 per cent after November's 0.5 per cent rise but left the year nursing a 0.8 per cent contraction, the biggest drop since 2002.
The Office for National Statistics said it had revised down growth of the wider production sector in five of the past seven months, leaving the sector looking more fragile than before.
The ONS said the revisions on their own would not cause it to cut its GDP estimates, but they put the statistics department even further adrift of the upbeat view of growth held by the Bank of England.
"These figures again raise doubts over the [Bank's] assertion that GDP is being under-recorded," John Butler, the UK economist at HSBC, said. It implied there was greater spare capacity in the economy than the Monetary Policy Committee had assumed, he said - a point Stephen Nickell made when he voted for a cut in interest rates in December and January.
The MPC began its monthly policy meeting yesterday and will unveil its decision at noon today. City economists are unanimous in expecting no change for the sixth month in a row.
The National Institute of Economic and Social Research, the think-tank, urged the MPC not to cut rates, saying the economy grew 0.8 per cent in the three months to January. Simon Kirby, an NIESR economist, said: "Although some evidence suggests January was weak after faster growth, looking at the period as a whole there is not a good case for reducing interest rates."
Economists in the City said that with production worth one-fifth of the economy, the Bank would be more focused on the robust health of the services sector and consumers' willingness to spend and borrow, particularly for a home.
The breakdown of yesterday's figures showed nine of the 13 subsectors of manufacturing grew, led by a 1.9 per cent jump in chemicals, to its second-highest level on record. This was fuelled by a 2.4 per cent surge in output by drugs companies, which rose to its highest level since records began in 1978. It was offset by a 1.8 per cent fall in electrical and optical equipment, led by a near 6 per cent fall in computers - the worst since May 1997.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments