Factory gate inflation delivers mixed fortunes
1 min read
Official factory gate inflation figures have shown the price manufacturers receive for their goods rising weakly and raw materials costs falling, but those serving the construction industry will be disappointed with its continuing poor performance.
Economic analyst Chris Williamson suggested the data meant the country has slipped into a deeper recession than previously thought.
Manufacturers' output prices were 3.3% on a year ago in April, the weakest rate of increase since December 2009, although the annual rate has fallen from 3.7% in March and from a recent peak of 6.3% last September.
However, the price manufacturers pay for materials and fuel were down to just 1.2%, easing sharply from 5.6% in March and well down on last July's peak of 18.5%. Lower costs should feed through to lower output prices in coming months, Williamson believed.
But there was worse news for manufacturers dependent on the construction industry where output "collapsed" 4.8% in the first quarter instead of a prior estimate of 3.0%.
"The volume of new construction work fell by an even steeper 6.9% in the first quarter, suggesting that the sector is mired in a slump of weak demand and will see a further sharp fall in output in the second quarter," concluded Markit's chief economist.
The 15.9% fall in new infrastructure work in the first three months of the year had come as a "complete shock".
