Manufacturing output in surprise drop

City A.M. Reporter
Manufacturing output unexpectedly fell in April, official data has shown – suggesting Britain's recovering economy got off to a slow start in the second quarter.

Figures from the Office for National Statistics also showed producer input costs eased less than expected in May, although factory gate inflation slowed slightly more than expected.

The ONS said manufacturing output fell 0.4 per cent in April, after a rise of 2.2 per cent in March, and against forecasts for a 0.5 per cent rise.

The wider measure of industrial production also fell 0.4 per cent, confounding forecasts for an increase of 0.4 per cent.

The declines were the first since January and indicate the second quarter got off to a weak start after two consecutive quarters of modest post-recession expansion.

The figures failed to elicit much market response and analysts said the monthly figures should be read in the context of survey evidence suggesting the manufacturing sector was continuing to recover.

"We're not surprised that manufacturing has retraced on the month, given the extremely sharp pace of growth recorded over the previous couple of months," said Philip Shaw, economist at Investec. "Today's figures represent the volatility of the numbers, not a setback for the sector."

The ONS said seven of the 13 manufacturing sub-sectors recorded declines in output in April, with the transport, food, drink and tobacco and electrical and optical equipment sectors suffering the biggest falls.

It said there was no evidence that disruption to air traffic in April due to volcanic ash drifting over from Iceland had impacted on output.