Back-to-back monthly rise in manufacturing output

10 May 2013
By Edd Gent
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Factory production in March improved 1.1 per cent on a month earlier

Factory production in March improved 1.1 per cent on a month earlier

The manufacturing sector recovery has shown signs of momentum after output rose for a second month in a row in March.

Factory production improved 1.1 per cent on a month earlier and was a key contributor behind a 0.7 per cent improvement in the wider measure covering all industrial production, data from the Office for National Statistics (ONS) showed yesterday.

It was the first back-to-back monthly rise in manufacturing output in two years, albeit helped by a slump in January due to poor weather.

Lee Hopley, chief economist at EEF, the manufacturers’ organisation, said: “Manufacturing looks to have had another good month in March with the data pointing to encouraging gains across the board, with almost all sectors posting some growth and on-going strength in transport and electrical equipment sectors.

“Taken with the improvement in the PMI (Purchasing Managers Index) earlier in the month the data appears to be moving in a more positive direction. However, a smooth recovery path is not assured as uncertainties in the external demand environment are likely to stay with us in the coming months.”

While there was a 2.4 per cent rise in the supply of electricity and gas following the coldest March since 1962, today's figures were not enough to revise the ONS's recent estimate for 0.3 per cent GDP growth in the first quarter.

And though overall production is now back to its level at the end of last year it is still 1.4 per cent below its level a year ago.

Mike Rigby, head of manufacturing at Barclays, said: "The latest figures will certainly help build momentum in the sector, which has struggled with a lack of visibility and confidence in the first quarter.

"The softening of input prices should also help the second quarter performance. However, there is still some way to go before we see a stable return of growth in the sector with confidence around future order books."

Samuel Tombs, an economist at consultancy Capital Economics, said he doubted that the strong growth in the manufacturing sector will be maintained, particularly as it only recouped the sharp fall in January's production.

He said: "With the eurozone still deep in recession, any recovery in the export-dependent industrial sector this year is likely to be limp at best."

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