Strong rise in German industrial output signals solid second quarter growth

Strong rise in German industrial output signals solid second quarter growth

Strong rise in German industrial output signals solid second quarter growth

This increases the likelihood that the Bank of England will hold fire on increasing interest rates.

The signs of continued weak growth came as businesses pressed British Prime Minister Theresa May and her government to negotiate a smooth Brexit in two years' time, saying an abrupt departure would deter investment.

"Based on today's data and the business survey results for June, we now think that industrial production is likely to have contracted by 0.5 per cent in the second quarter, with construction output down 1.8 per cent". Construction output also fell on a three-monthly basis, though this is after several years of growth.

Analysts said the economy was now unlikely to recover much speed in the second quarter, after expanding by just 0.2 percent in the first three months of the year.

Peter Dixon, an economist at Commerzbank, was quoted by the BBC as saying: "It's all building up a pattern here that says the economy is clearly losing momentum".

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"This morning's data paint a rather bleak picture for the United Kingdom economy and underline the challenges lying ahead", said Kay Daniel Neufeld, senior economist at the Centre for Economics and Business Research. "Under those circumstances, the timing of the hawks on the Monetary Policy Committee pushing for a rate hike doesn't look great".

The UK's construction output fell by 1.2 per cent in May, figures published by the Office for National Statistics (ONS) have shown. Industry figures have shown a fall in new vehicle sales.

Similarly, manufacturing output dropped 0.2%, offsetting a 0.2% rise in April. It's also said it doesn't want to remain a member of the customs union as that would limit its ability to strike trade deals beyond the EU. The deficit including trade-in services widened by £1bn to £3.1bn in May, despite a pick-up in export volumes.

The ONS figures add to other gloomy data released yesterday showing slower rates of expansion across manufacturing, services and construction - with the weakest rate of growth seen in the services sector, as weaker consumer spending had an impact.

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