Recovery Fears Raised By Shocking Industrial Output

A shocking fall was suffered by industrial output in the month of January which raised

new doubts that the economy will rebound after fall at the end of 2011, or a fresh challenge to growth will be given by oil prices. Office for National Statistics released data on Friday which will put an extra pressure on the Chancellor George Osborne to take the steps to boost the economy. George is prepared reveal the budget of 2012 on March 21. There are the chances that the asset purchase programmed will be extended by Bank of England in May.

The shrink of 0.4% in industrial output was witnessed in the month of January. It wiped out the profits in December. Samuel Tombs, the Capital Economist said that the disappointing industrial figures provide further proof to advice that the manufacturing recovery is already starting to lose steam. A sharp drop in oil and gas output drove the fall in 2011 data, the energy sector has been a persistently weak performer. The reason was unplanned maintenance, unfavorable weather and a long term decline in the North Sea energy reserves of UK.

But, the factory output was also weaker which accounts for the lions share of industrial production. It was growing by just 0.1% compared to the predictions of 0.3%. EEF, the major association of manufacturers in UK said that factory output had rebounded at the beginning of 2012. Output and orders are expected by firms in order to grow at fastest pace, over coming three months. Some analysts doubted if the BoE would have scope for providing stimulus to the economy. This doubt was caused due to a pick-up in factory gate inflation and the input costs of enterprises which was shown in separate ONS data on Friday.

An annual rose of 4.1% was witnessed by February producer output prices which were above the predictions for a reading of 3.9%, after a good rise on a month for input costs for home-produced meal and crude oil. The members of the BoEs nine-strong Monetary Policy Committee are worried by the figures. These members are concerned with the fact that the consumer price inflation will not decline as frequently as the central bank forecasts from its current level of 3.6%. Need urgent finance at this time of economic slump then simply apply with 12 month loans no credit check and get quick funds without any hassle.

The BoE predicted in its last projection that CPI would decline to below its 2% target by the end of 2012 and would remain the same till 2014. UK petrol prices have been driven by the tensions in Middle East to new record high in recent weeks. Crude oil input costs rising at fastest monthly pace have been showed by PPI data, at the time when a three-year high of 5.2% was hit by consumer price inflation. HS Global Insight economist Howard Archer said that sticky inflation would maintain the squeeze on purchasing power of consumers and make it arduous for the Bank of England to do more quantitative easing.

by: John Harris

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