UK manufacturing recovery 'maintained'

The UK's manufacturers maintained their recovery in June despite a surprise fall in wider industrial production, official figures claimed today.

The stellar 1.1 per cent growth for the overall economy between April and June would be left unchanged by the figures, the ONS said.

Manufacturing is now growing at an annual rate of 4.1 per cent as the sector recovers from a brutal recession. Car production is 22 per cent ahead of a year ago, while shipbuilding has also risen 41 per cent year-on-year.

Factory gate prices rose 0.1 per cent month-on-month, as rising food and textile costs offset falling petrol prices over the month. The increase exceeded a 1 per cent slide in input costs during June as firms looked to rebuild margins.

While manufacturing output was up 1.6 per cent against the previous quarter, concerns remain over a slowdown in the second half of the year as the coalition's savage deficit-tackling cuts kick in.

The sector has been boosted so far by a surge in output as firms replace stockpiles used up in the recession, although this temporary effect is expected to fade as the year progresses.

The Bank of England remains uncertain over the strength of the recovery with no signs of emergency support measures for the economy being withdrawn in the near future.

Nida Ali, economic adviser to the Ernst & Young ITEM club, said: "Recent data suggests that growth for export orders has stalled. Further, the boost from restocking is likely to fade, leaving a bleak outlook for future demand. The second quarter is therefore likely to represent the high point of growth in industrial production."

British Chambers of Commerce chief economist David Kern added: "There is no room for complacency. The recovery is not yet secure, and we are now seeing worrying signs that the global economy is slowing down.

"Although manufacturing is still enjoying a relatively competitive exchange rate, global problems, particularly in the eurozone, pose serious challenges."

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