British Manufacturing Production figures announced this morning by the Office for National Statistics point to an expansion in the sector for the month of March. The numbers came in slightly higher than expected, showing a 0.8% increase over the forecasted figure of 0.4%. This is a significant improvement over January’s revised f 1.9% drop in manufacturing output.
British Industrial Output was also shown to have risen by 1% in the last month, after a 1.3% drop in the month before that. This was probably due to the harsh winter causing the biggest ramp up in the production of electricity and gas since October.
The statistics are heartening to an economy that was dragged down by lacklustre manufacturing in the final quarter of 2012. If in the period from January to March the British economy is shown to have contracted again, this will mean that it has fallen into a triple-dip recession. These figures will not be announced until the end of April but these positive manufacturing readings will no doubt be seen as a step in the right direction.
Traders were not convinced, with both GBP/EUR and GBP/USD currency pairs mirroring market hesitancy to back Sterling. As the figures were announced GBP spiked to 1.53051 (GBP/USD) and 1.17451 (GBP/EUR), but this initial bullish sentiment was short-lived and gains were lost within the next few minutes. Binary traders who placed short expiring CALL trades on these pairs would have seen their first trades expire in the money if they were quick enough off the mark. Both pairs have been in upward trends since the data release but traders still seem tentative. Longer expiring binary Call trades will also have been profitable however in the last few minutes GBP/EUR seems to have taken a dip, falling back below the level of that initial price spike at 9:30am GMT +1.
One of the reasons for such cautiousness on the part of traders is that the results from the manufacturing purchasing manager surveys indicate that perhaps this boom in British manufacturing will be short lived. The British Purchasing Managers Index results have come in negative for two consecutive months, indicating that the people in the know are not too optimistic.
Another reason for the unpredictable, or muted, price action is that British Trade Deficit results came in negative today, indicating a growth in British Trade Deficit to 9.416 billion pounds in February, substantially larger than the forecasted figure of 8.168 billion. The same goes for British trade deficit win non-EU nations, which came in at 4.276 billion pounds versus the forecasted 3.65 billion.