First derivative stuff! The inventory correction may have run its course in the UK. Now, final demand must grow if we are to get a sustainable recovery rather than just a short inventory cycle.
U.K. industrial production posted its first monthly increase for 14 months in April, the latest signal that the recession-hit economy could start growing sooner than expected, official data showed Wednesday.
Industrial production increased 0.3% on a month-to-month basis, the first rise since February last year, after a revised 0.3% drop in March, the Office for National Statistics said. That helped the annual decline in industrial output moderate to 12.3% in April from a 12.7% fall in March.(…)
March’s declines were revised from falls of 0.6% on the month and 12.4% on the year reported last month.
"Add in the fact that last week’s service sector purchasing managers index showed positive growth and it is looking increasingly possible that the U.K. could lead the rest off the Group of Seven (leading industrial nations) out of technical recession," ING economist James Knightley said in a note.
A positive second-quarter gross domestic product reading isn’t completely out of the question, but it still looks more likely to come in the third quarter, he added.
The ONS said U.K. manufacturing output increased 0.2% on the month in April, following a revised 0.2% gain in March, which also marked the first increase since February last year. On the year, the drop in manufacturing output moderated to 12.7% from a revised 13.1% in March.(…)
March’s manufacturing readings were revised from declines of 0.1% on the month and 12.9% on the year reported last month.
"Today’s data are particularly encouraging in that they suggest that U.K. firms, in contrast with their German counterparts, may have worked through their inventory overhang somewhat more quickly," Colin Ellis, a European economist at Daiwa Securities SMBC, said in a note.
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- U.K. Manufacturing Output, Industrial Production Drop in August
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