UK factory output takes unexpected tumble

By Lee Wild

Date: Wednesday 10 Mar 2010

Britain’s manufacturers had it tougher than expected in January as the awful weather contributed to the first fall in output for five months.

Production fell 0.9% at the start of 2009, according to the Office for National Statistics, confounding economists who’d predicted 0.2% growth. The sector, which accounts for about 13% of GDP, last fell in August.

The year-on-year rise of 0.2% was much less than the 1.4% predicted, although it was the still first increase in activity since March 2008.

Most categories took a knock, with textiles, leather and clothing down 5.5%, although food, drink and tobacco grew by 4.1% on the month before.

Industrial output, which accounts for 17% of the economy, dropped 0.4% compared with expectations of a 0.3% gain, while a 1.5% year on year decline exceeded the estimate of 0.8%.

While disappointing, it’s worth remembering last week’s CIPS purchasing managers’ index revealed manufacturing growth remained steady at a 15-year high in February.

"The manufacturing sector seems firmly back on the road after this severe recession," said CIPS boss David Noble at the time.

Howard Archer, IHS Global Insight’s chief UK economist, agrees and warns against reading too much into the January’s decline.

“It adds to the overall evidence that the economy took a significant hit from the weather in January, but latest data and survey evidence generally suggest that the economy bounced back pretty well in February. So hopefully, there will be a marked rebound in manufacturing output in February,” he said.

“The overall impression we get from the recent data and survey evidence is that manufacturers are currently seeing a reasonable but far from spectacular pick up in activity after a largely dire 2009.”

« Go back to news channel

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE