UK manufacturing output rebounds in January

Chris Papadopoullos
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Bombardier Train Production Line
Despite the rebound, manufacturing is still lower than it was a year ago (Source: Getty)

UK manufacturing output bounced back in January, according to figures released by the Office for National Statistics this morning.

The sector's output increased 0.7 per cent compared with December. Factory output suffered a sharp drop in December and contracted over the whole of 2015.

Total industrial production, which includes mining and quarrying as well as manufacturing, also rebounded, rising 0.3 per cent between December and January. Compared with the same month last year, industrial production was 0.2 per cent higher while manufacturing output was down 0.1 per cent.

The largest contribution to the increase in manufacturing between December 2015 and January 2016 came from other manufacturing and repair, which increased by 4.8 per cent, the ONS said. This industry includes the manufacture of furniture, other manufacturing and repair and installation of machinery and equipment.

Industrial production makes up 15 per cent of the UK's economic output.

"Overall, 2015 was a poor year for the industrial sector, especially the manufacturing sector. While 2016 started slightly better, near term prospects don’t look great with the manufacturing sector dealing with subdued global growth and North Sea production hit by low oil prices," said economist Scott Bowman from Capital Economics.

"That said, the more recent depreciation of trade-weighted sterling and our expectations of a pick-up in world growth in 2016 should slightly improve the manufacturing sector’s fortunes as this year progresses."

David Kern, chief economist at the British Chambers of Commerce, said:

While ONS figures show manufacturing growth was better than expected in January, other evidence - including the BCC’s Quarterly Economic Survey - suggests that the sector is still struggling, and on an annual basis output remains in negative territory.

The UK economy will have to continue to rely on its dynamic and flexible services sector for the next few years, which will continue to be the main driver of growth.

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