U.K. manufacturing output posted the biggest fall in more than five years in April, missing expectations for a rise and sending the pound lower.
Manufacturing output fell by 1.4% from March, well below Econoday's consensus estimate of a 0.4% increase, as 9 out of 13 sub-sectors retreated.
"Monday's disappointing data will cast doubt over whether the economy will fully rebound from the weaker growth outcome seen in the first quarter," said James Smith, developed markets economist at ING Research.
The pound fell sharply after the data, and traded 0.3% lower at $1.3370 at 5:47 a.m. ET.
"If the economy continues to show only limited signs of recovery, then the [Bank of England] may well opt to remain on hold in August. As a few BoE voters have said recently, the cost of waiting to raise rates is not especially high," Smith said.
In the three months to April, manufacturing output decreased by 0.5% compared to the previous three months, its largest contraction since May 2017. The Office for National Statistics said the decrease was primarily because of declines in electrical equipment and basic metals and metal products.
Both export and domestic turnover has slowed, the ONS said.
"Of the 44 industries, 21 display a negative contribution for the three months to April 2018 whereas only 14 industries contributed positively. This is only the third time since October 2016 that negative contributors have numbered more than positive contributors, providing the basis for an overall fall in manufacturing," it said.
Total industrial production declined by 0.8% in April from the previous month due to falls in manufacturing, energy supply and water and waste.
In the three months to April, production increased 0.3% from the previous three months and was up 2.3% from the same period a year earlier. Manufacturing made the largest upward contribution to the year-over-year increase in total production.
Meanwhile, a separate ONS release showed construction output increased by 0.5% in April from the previous month after three straight monthly declines. However, output in the sector decreased by 3.4% in the three months to April from the preceding three month period, its largest fall since August 2012. The drop was driven by decreases in both repair and maintenance and new work.
Total new orders in construction fell by 4.6% in the first quarter of 2018 from the previous quarter, after a 13.4% decline in all other work more than offset the 18.6% growth in private housing new orders.
