UK Industrial & Construction Output Fall Unexpectedly

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Industrial output jumped by 1.2 percent on the month in May, data from the Economy Ministry showed. The sector was hit by a 4.4% drop in auto production-the biggest fall since February a year ago.

The ONS confirmed that although output remains at a relatively high level, total real construction output fell by 1.2 percent on both a monthly and 3-month on 3-month basis in May.

May's output was also slightly down on the £11.46bn recorded in the same month of 2016.

The pound fell by 0.6 per cent against the dollar to $1.2891 and by 0.5 per cent against the euro to €1.1298 today. Economists polled by The Wall Street Journal had forecast industrial production would rise by 0.5%. By comparison, import volumes rose 2.8 percent over the same period.

The latest composite PMI survey also showed that business activity rose at its weakest pace in four months in June, with business optimism falling amid rising uncertainty around the future of the country after Brexit.

"And though an improved performance from the services sector will provide some support, GDP is likely to have grown by just 0.3% with the risks to that projection skewed to the downside".

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FXTM research analyst Lukman Otunuga said: "With the string of economic data from the United Kingdom this week proving nothing to celebrate about, investors may be forced to re-evaluate the possibility of a United Kingdom rate hike this year".

In addition, the Bank of England's chief economist, Andy Haldane, said last week it needed to "look seriously" at the possibility of raising interest rates to counter the recent pick-up in inflation, BBC said.

The month-on-month drop in manufacturing included a 4.4 per cent reverse in vehicle production the biggest drop since February 2016. On a yearly basis, construction output slid 0.3%.

The news came as the ONS published figures showing the UK's trade deficit widened by nearly £2bn in the three months May, while industrial production missed expectations.

Meanwhile in the housing market, Halifax reported a 1 per cent fall in house prices in May.

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