According to James Smith, Developed Markets Economist at ING, the latest disappointing collection of UK production and trade data will come as a serious blow to the Bank of England, who have been pinning hopes on the economy rebounding through the second quarter.
Key Quotes
“Manufacturing output shrank by 1.4% in April, the sharpest monthly fall since 2012, a trend which also saw the trade deficit widen to £5.3 billion.”
“Given how sharp the fall was, it’s easy to try and pin it down to some kind of temporary aberration. But that doesn’t appear to be the case – the ONS noted that the weakness was “widespread” across sectors. Remember too that April was supposed to be the month where production rebounded following the snow-related disruptions seen in March.”
“If the economy continues to show only limited signs of recovery, then the Bank may well opt to remain on hold in August. As a few BoE voters have said recently, the cost of waiting to raise rates is not especially high.”
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