British Pound Plunges on Weak Industrial Production Report
- Year-on-year Industrial Production at 0.9%, below expectations
- Manufacturing Production dropped -0.4% in November, below expectations
- British pound lower versus other major currencies
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The British Pound dropped versus other major currencies (at the time this report was written) after today’s industrial production report came well below expectations. The report showed industrial production fell -0.7% in November, below the prior 0.1% rise and the expected 0.0% figure. The Year-on-year figure printed an increase of 0.9%, which was below the prior and expected reading of 1.7%. Industrial Production measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities. The manufacturing output, which account for approximately 80% of overall industrial production, printed -0.4% in November, which was below a rise of 0.1% expected by economists. The year-on-year figure fell -1.2%, below the expected -0.8%, and marked the fifth consecutive decline.
Looking into the report, the Office for National Statistics said there were decreases in all of the main sectors, with manufacturing, mining, electricity & gas having the largest contribution to the decrease in total output. The report is in line with last week’s Markit Manufacturing PMI which suggested manufacturing will only make a marginal contribution to UK’s economic growth in the final quarter of 2015. With imported disinflation from the Eurozone, the latest figures seemed to have added further evidence to the growing likelihood of a later than previously expected rate hike by the BoE, and the British pound was lower versus other major currencies.
DailyFX Quantitative Strategist David Rodriguez recently said that the BoE is almost certain to keep interest rates and its asset purchase program unchanged at Thursday’s meeting.