LONDON--Industrial production in the U.K. picked up in May, official data showed Tuesday, as a rise in oil and gas production offset a steep fall in the manufacture of weapons and ammunition.
British industries increased their output 0.4% on the month, the Office for National Statistics said, which was above what analysts polled by The Wall Street Journal last week were expecting. Year-on-year, output rose 2.1%.
Overall production was held back by factories, which decreased their output by 0.6% compared with April. The biggest fall was in the manufacture of weapons and ammunition, official figures showed, which plunged 21.5%. However, the ONS said that this industry is based on large contracts and therefore more likely to report swings in output.
In fact, May's data is more upbeat for manufacturers than headline figures might suggest, as they confirmed that the oil industry in the British North Sea is back on its feet. Producers of crude and natural gas reported their strongest annual increase in output in more than a year and a half, after showing signs of recovery for three months in a row, the ONS said.
Oil fields and offshore pipelines had slowed their activity since the latter half of 2014, due to a global slump in oil and gas prices. Now the extraction industry appears ready to ramp up production, boosted by a rebound in global prices, as well as tax incentives announced back in March.
Regardless, British companies are still facing great hurdles to sell their production abroad, business surveys show, mostly due to a stronger pound. According to data released last week by market-research company Markit Economics Ltd, the manufacturing sector slowed in June to a 26-month low.
The single currency started a prolonged dip against other major currencies when the European Central Bank announced in January its flagship scheme to buy euro-denominated sovereign bonds--a policy known as quantitative easing or QE--which has driven investors into other currencies. This makes it more challenging for British products to remain competitive in the eurozone--which is the U.K.'s number one market for exports. Political instability concerning the Greek crisis has helped further chip away at the euro.
However, economists hope that improved growth in the single currency area will end up benefiting British companies. Recent signs also point to a spike in consumer confidence following May's general election. The prospect of a weak government had driven households and companies to refrain from spending, analysts say, but the Parliamentary majority achieved by the Conservative Party will likely dispel fears of political instability. This bodes well for the U.K. into the second half of 2015.
Write to Jon Sindreu at jon.sindreu@wsj.com and Jason Douglas at jason.douglas@wsj.com
(END) Dow Jones Newswires
July 07, 2015 04:45 ET (08:45 GMT)
#FX
#Forex
#SaleForex
#ONS
#OilFields
#BritishCompanies
#UK_Factory
#DipOffset
#NorthSeaBoost
0 Response to "UK Factory Dip Offset By North Sea Boost "
Thanks for give comment.