July production output disappoints
The UK Office of National Statistics released the production data for July on September 9, 2015. The total production output fell by 0.4% in July as compared to June 2015. The 0.8% decline in manufacturing production, the biggest drop in 14 months, was the primary driver of the fall. The 1.3% rise in the electricity, steam, gas, and air-conditioning sector partially offset the fall in manufacturing production.
The year-over-year total production increased by 0.8% compared to July 2014, but was below the consensus figure of 1.4%. The largest contributor to the increase in the year-over-year figure was the mining and quarrying sector, which posted an increase of 6.7%.
Pound reacts to the fall in manufacturing
The pound fell to a low of 1.54 after the release of production data, which was below the forecast. The market awaited the Monetary Policy Committee meeting on September 10 for further direction. The weak data dampened the expectation of a rate hike. The pound to dollar pair closed the day 0.18% lower.
Impact on the market
The iShares MSCI United Kingdom ETF (EWU) was trading on a negative bias, primarily due to the weak data release and fell by 0.47% on September 9, 2015. The First Trust United Kingdom AlphaDEX ETF (FKU) followed a similar trend, falling by 0.96%.
Among major UK ADRs (American depository receipts), British Petroleum (BP) fell by 1.62%. National Grid Transco (NGG), an electricity and utility company, fell by 0.63% on September 9, 2015. Banking ADRs were also on a negative trajectory with Royal Bank Scotland (RBS) ending the day 1.28% lower.