The pound has dropped after UK industrial production showed a surprise fall in February

 
Emma Haslett
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Analysts had expected growth in industrial production (Source: Getty)

The UK's industrial production suffered a surprise contraction in February, new figures have shown - missing analysts' expectations.

Figures by the Office for National Statistics (ONS) said total production in the UK fell 0.7 per cent compared with the month before, dragged lower by electricity and gas, which fell 3.4 per cent.

The ONS blamed a warmer-than-average February, which meant less electricity and gas needed to be produced.

The figures nevertheless took analysts, who had expected a 0.3 per cent increase, by surprise, pushing the pound down 0.2 per cent against the dollar, to $1.2443, and 0.1 per cent against the euro, to €1.1690.

However, ONS added production increased 1.6 per cent in the three months to February, pushed higher by manufacturing, which rose 2.1 per cent.

But that may be temporary: Markit's purchasing managers' index for the sector, published on Monday, showed output in the manufacturing sector had fallen in March.

“Looking forward, the sector’s prospects will represent the outcome of a battle between the activity-depressing effect of higher inflation versus the positive boost from the weak pound and a better global outlook," said Martin Beck, senior economic adviser at the EY Item Club.

Today Samuel Tombs, chief UK economist at Pantheon Macroeconomics, added: "The deterioration in the... manufacturing PMI in March... suggests that production will continue to disappoint.

"In addition, the average temperature was even further above its long-run average in March than in February, so output in the energy supply sector likely fell further last month.

"It is clear that industry does not have the momentum required to offset the consumer-led slowdown in the services sector this year."

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