Hopes for a bounce-back for the UK economy after its sluggish start to the year have been cast into doubt after official figures showed a sharp downturn in the manufacturing sector.
The 1.4% decline in April reported by the Office for National Statistics (ONS) was the biggest fall since October 2012.
It sent the pound sliding below $1.34 against the US dollar as expectations of an interest rate hike later this summer were dampened.
The Bank of England has indicated that it does not plan to raise rates until it sees proof that the economy is on a firmer footing.
Latest figures showed widespread weakness across much of the manufacturing sector, continuing an overall slowdown in recent months after a period of sustained growth over the latter part of 2017.
ONS head of national accounts Rob Kent-Smith said: “International demand continued to slow and the domestic market remained subdued.”
The data also revealed the biggest trade deficit for goods since September 2016, while a small recovery for construction fell short of expectations.
Britain’s economy grew by just 0.1% in the first quarter of the year, with some ascribing the slowdown to the impact of the “Beast from the East” – though the ONS said the effect of the weather was limited.
Experts said the latest data dampened hopes of an upturn in the second quarter.
Philip Shaw, an economist at Investec, said: “It suggests that the rebound in GDP as a whole in Q2, if there is one, could be pretty subdued and it certainly questions the likelihood of another rate increase in August.”
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Andrew Wishart, UK economist at Capital Ecnomics, said the data will have done little to reassure Bank of England rate-setters that the slowdown in the first quarter would prove temporary.
But he added that figures from more recent surveys suggested “that some rebound is in store.”
Source: Sky