UK manufacturing output is rising for the first time since February last year, according to official data that yesterday bolstered hopes that the economy might be headed for recovery.
The Office for National Statistics said manufacturing output rose by 0.2% during April. The City had forecast an unchanged month-on-month position.
And the ONS revised its figures for March to show a 0.2% rise in manufacturing output in that month. It had last month reported a 0.1% fall in manufacturing output for March.
The ONS had not, before yesterday's data, reported a monthly rise in manufacturing output since February 2008.
Yesterday's data showed broader industrial production - which includes mining and quarrying, oil and gas extraction, and electricity, gas and water supply as well as manufacturing output - rose by 0.3% in April. This was the first monthly increase in industrial production since February last year.
The National Institute of Economic and Social Research estimated in the wake of the data that the UK economy had returned to growth in April, growing by 0.2% during that month and by a further 0.1% in May.
However, Bank of England policy-makers, including governor Mervyn King, have in recent weeks been at pains to highlight uncertainty over whether any recovery will prove to be sustainable. In this regard, King has continued to emphasise the scale of the financial sector troubles that led to the recession.
In spite of the two consecutive monthly increases revealed in yesterday's data, manufacturing output in April was down 12.7% on the same month last year. This represented a marginal deceleration in the year-on-year rate of decline from 13.1% in March.
The year-on-year decline in industrial production also decelerated marginally, from 12.7% in March to 12.3% in April.
Jonathan Loynes, chief European economist at consultancy Capital Economics, viewed April's industrial production data as "further evidence that the twin impacts on the industrial sector of very weak global demand and falling inventories are starting to fade".
However, noting industrial production in the February to April period was down 3.2% on the preceding three months, Loynes added: "Of course, it would be premature to get carried away. Industrial production is still down by a huge 12.5% year-on-year and by over 3% in the last three months.
"Note, too, that the industrial surveys, whilst improving over recent months, are some way yet from signalling a return to sustained growth in the manufacturing sector.
Loynes did acknowledge that "April's figures certainly suggest that the drag on overall economic growth from the industrial sector is now easing".
He added: "Even if production were to remain constant in May and June, this would give a quarterly decline in Q2 the second quarter overall of just 0.3% or so, much smaller than Q1's 5.2% drop."
Loynes calculated this would, other things being equal, add about 0.9 percentage points to quarterly gross domestic product growth, compared with the -1.9% reported by the ONS for the opening three months of this year.
He added: "The numbers provide further evidence that the economy's rate of contraction has slowed markedly in the second quarter and that a return to positive growth may not be far off."
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "The first rise in industrial production for 14 months in April adds to a recent stream of improved data and survey evidence and reinforces belief that the economy will see only modest GDP contraction, at worst, in the second quarter.
"Furthermore, manufacturing output rose by 0.2% month-on-month for a second month running in April after March's previously reported drop of 0.1% was revised."
Archer said he believed a 3.2% month-on-month rise in output of the transportation equipment sub-sector "reflected car production resuming in some plants after extended winter closures to reduce stock levels".
However, he also highlighted continuing challenges for manufacturing and the potentially dampening impact of the recent recovery of the pound on manufacturers in terms of their competitiveness in overseas marketplaces.
He said: "Manufacturers still face serious obstacles and sustainable growth in the sector could remain elusive for some time to come."
0 comments:
Post a Comment