U.K. Manufacturing Shows Improvement Yet Misses Forecasts, Sterling Drops

U.K. Manufacturing Shows Improvement Yet Misses Forecasts, Sterling Drops

Today's report showed the continuation of the release of data from the U.K. that is showing improvement as manufacturing productions signaled improvement in November, yet it came below forecasts.

Manufacturing production dropped -0.3% two months ago after dropping 1.3% in Oct., lower than expectations of 0.5% advance, where industrial production advanced 0.3% from a prior of -0.8%, below forecasts of 0.8% gain.

A report released this week showed that U.K.`s trade deficit narrowed in November to 9.16 billion pounds from 9.49 billion pounds in October as exports advanced 2.9 percent to 24.8 billion pounds, the highest since July, while imports soared 1.1 percent.

The British Chambers of Commerce report showed that U.K. business confidence improved in the fourth quarter.

By the same token, U.K. PMI manufacturing for Dec. showed a strong rebound to 15-month high of 51.4 from 49.2 in November.

The British economy is witnessing a rebound in growth to leave three consecutive quarters of contraction as in the third quarter, the economy expanded 0.9%, the strongest growth in five years, below forecasts, yet it may fall back in the coming quarters as the pickup is largely an artefact of special events, most notably the Olympic Games that was hosted by London from July 27 to Aug. 12.

The economy would shrink 0.1% this year, and revised the previous estimate of 2.0% growth for next year to 1.2%, U.K. Chancellor of the Exchequer George Osborne said in December.