U.K. Industrial, Factory Production Expand Unexpectedly In July

Industrial output in the U.K. rebounded from the three-month contraction, signaling ailing recovery is adding a little bit of steam, after the Bank of England yesterday keened to keep the interest rates at 0.50 percent and the size of the asset purchasing facility steady at 375 billion pounds in September.

Figures from the ONS showed today that Industrial production grew unexpectedly by 2.9 percent in July, following revised contraction of 2.4 percent in June, beating analysts` median estimate of 1.5 percent growth.

In fact, the royal economy is on track of deeper contraction, figures showed this week the GDP was downwardly revised to -0.5 percent, however the latest PMI`s on manufacturing and services signaled quite a momentum this past month.

On the year, industrial production contracted 0.8 percent, after falling 3.8 percent in June, but better than expectations of 2.7 percent contraction.

Manufacturing output also grew at faster-than-expected pace in July, as the index rose 3.2 percent, after falling 2.9 percent up from expectations of 1.8 percent rise.

Moreover, the index fell at an annual rate of 0.5 percent, but was better than 3.9 percent contraction in June, beating expected decline of 2.4 percent.

The U.K. economy shrank at 0.5 percent rate over the previous quarter, as manufacturers risk the intolerable unemployment as consumption slumped due to the government`s austerity drive in an attempt to crop its looming budget deficit.

More data was on the economic front today as the U.K. released the inflation-linked producer`s price index for August, reflecting higher prices of final goods produced within the Kingdom, as energy prices rose relatively, adding pressure on policymakers seeking to revive growth.

PPI output expanded 0.5 percent from a revised 0.1 percent and nearly flat expectation. Annual PPI inflation slowed to 2.2% from the revised previous of 1.8% from 1.7%, and still better than the expected reading of 1.9%.

The PPI output core expanded as well by 0.0 percent, compared an initially revised -0.1% and expected flat expectation. The annual index expanded to 1.2% in line with prior and expected reading.

Input prices jumped 2.0 percent from a revised rise of 0.4 percent, beating expectations of 1.7 percent decline. The annual index came in line with estimates of 1.4 percent scoring an expansion compared with the previous decline of 2.4 percent.

In general, the economy is expected to rebound in the third quarter, after recent data pointed the economy is likely to crawl out of recession, but as long as employment falters considerably we can expect the economy to take more time to sustain this expansion.