Industrial output in the U.K. posted a surprising decline in the second month of the year as a sharp drop in oil and gas supply dragged down flat manufacturing output, according to The Daily Telegraph. On Wednesday, the Office for National Statistics reported that industrial output in the U.K. dropped 1.2% in February from the prior month, marking a strong reversal of January’s 0.3% growth and the largest monthly fall since August 2009. Economics had expected a 0.4% gain, and the drop weighed on annual growth in output, which was 2.4% year-over-year in February.
The drop was led by a 7.8% drop in oil and gas extraction, although even the sub-index for manufacturing showed no growth in February. Nida Ali of Ersnt & Young ITEM Club said the “stagnation in manufacturing output suggests that GDP growth in the first quarter may not be as strong as currently expected.” Howard Archer of IHS Global Insight said the slowing of industrial production “reinforces the case for the Bank of England to keep interest rates unchanged,” despite continuing high inflation since the data contributes to “major uncertainties over the growth outlook.”