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UK factory gate data surprises analysts

Amid hopes that factory gate prices were set to increase during June it appears as though they actually fell by 0.2% against an expected rise of 0.3%. The 1.2% fall year-on-year is the largest single fall for over seven years and has made many analysts think again about the prospect of a short to medium-term recovery in the UK economy.

It was also interesting to see that input prices, i.e. the cost of raw materials, rose by 1.5% in June which was nearly twice the rate which analysts had expected. However, input prices are still 11% lower than they were 12 months ago with the price of oil a significant element of this figure. While the Office for National Statistics has been on the end of some severe criticism over the last few months, for the standard of data released to the market, surely they cannot have made such a large mistake this time?

Even experienced analysts are having difficulty projecting the short to medium term future of the UK economy because of the number of reports which appear to contradict each other. While eventually the general direction of the UK economy, which has hopefully started to turn, will become clearer, we may have to wait some time yet for definitive proof that the recession is over.

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