UK industrial production jumps in June: reaction After the disappointing figures we saw in May, this is positive news for the economy. There has certainly been an important change for the better in the second quarter of the year, and although it might be premature to assume the 0.6% GDP estimate will be revised upwards, this likelihood will increase if construction and services also improve. But we mustn't become complacent. The level of UK output is more than 3% below its pre-recession peak in 2008, and the manufacturing sector still faces major challenges over the months ahead. Annalisa Piazza, Newedge Strategy Today's outcome, coupled with the solid rebound registered by the main UK surveys, suggest that the UK activity has been running at a decent pace over the summer. Solid June IP figures also provide a robust carry-over effect for Q3 data. In a nutshell, today's IP report includes some encouraging signs for the UK industrial sector. The broad-based improvement seems to suggest that the current improvement in activity has good foundations and further progress is likely in the coming months, given the bright picture described by survey indicators. Surprisingly strong. The Q2 number is unrevised of course, so we're not going to get any changes to Q2 GDP. The fact that you've got some momentum at the end of Q2 ... means you would get a fairly punchy third-quarter number. So, I think the significance here is actually that the early signs are we will see continuing strength in Q3. We've also got some fairly solid retail sales numbers in the third quarter. It's not obvious we need at this exact moment in time to throw more monetary fuel on the glowing embers of the UK economy. The intermediate thresholds of forward guidance will be sufficiently vague and flexible that it won't force a policy mistake. There's clearly momentum in the economy as the year has gone on. I wouldn't be loosening policy now, in terms of actual policy settings or verbal guidance or any other means. The PMIs in the manufacturing sector have been in expansionary territory since April and what we're seeing today is that that is now coming through to official measures of production which is good news and points towards the UK's recovery being a bit more broad-based - certainly moving away from a recovery that looked to be more services-dominated than anything else. For the Q2 GDP figures it looks as if there's no headline revision so this is more interesting in terms of what it means for broader UK recovery momentum than anything else.