Manufacturing 'bounce' could be hopeful signal

A strong bounce back in manufacturing output during February gave more recovery signals for the UK economy today.

Overall production output from industries including mining and utilities was up one per cent over the month, offsetting January's half a per cent fall.

The figures follow upbeat data on UK services firms yesterday and positive forecasts from the Organisation for Economic Cooperation and Development - increasing the chances the Government will be boosted by better economic news in the run-up to polling day.

Jonathan Loynes, chief European economist at Capital Economics, said: "Coupled with survey evidence of stronger activity in the services sector, this suggests that the overall economy may have expanded by 0.5 per cent or more in Q1 - a far cry from fears of a 'double-dip'."

The figures showed manufacturing output 1.4 per cent above a year earlier but production overall still 0.1 per cent down year on year - signalling the weak nature of recovery so far and the long road back for UK industry.

The British Chambers of Commerce added that a manufacturing recovery needed to be "nurtured" and called again for next year's National Insurance rise to be ditched - reigniting an issue which has put Labour on the back foot in the opening shots of the election battle.

Chief economist David Kern said: "The manufacturing sector must be better supported and access to finance improved, particularly for exporting companies. Steps must be taken to help businesses create jobs and wealth, and the planned NI rise must be scrapped."

And Mr Loynes added that the Government may not necessarily benefit at the polls from signs of economic improvement. He said: "The figures support the view that the economic news in the run-up to the election is likely to be relatively upbeat.

"The big question is whether the Government, having largely blamed the downturn on the rest of the world, can take credit for it."

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