U.K. industrial production unexpectedly fell in January as factory output slumped, fueling concerns that Britain may slip into a triple-dip recession.
Production fell 1.2% from December, when it jumped 1.1%, the Office for National Statistics said today in London. The median forecast in a survey of 29 economists was for a 0.1% increase. Manufacturing also unexpectedly declined, by 1.5% The pound fell.
The U.K. economy shrank in the fourth quarter and the Bank of England has forecast that growth will remain "weak" in the near term. As manufacturers battle a continued slump in the euro area, the U.K.’s biggest trading partner, as well as lackluster demand at home, today’s data have fueled concern the economy will fall into its third recession in five years.
The drop in manufacturing output in January compared with economists’ forecast for an unchanged reading. The statistics office said respondents to the survey didn't cite heavy snowfalls that month for the slump.
Reports from Markit Economics last week showed factory output shrank in February and an index of construction reached the lowest in more than three years. Still, services strengthened and the three surveys point to "modest" growth in the first quarter, Markit said.
Today’s production data showed that mining and quarrying fell 2.4% in January from December, while electricity and gas rose 1.2%. Oil and gas dropped 4.3% because of the closing of the Schiehallion platform, operated by BP Plc.
The ONS said the suspension will continue for four to five years as a new production and loading vessel is built. Oil and gas output also plunged in September and October 2012 when the Buzzard platform in the North Sea was temporarily shut.
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