Strong manufacturing data boosts hopes of GDP revision

BRITISH manufacturing output surged an impressive 0.9 per cent in December, strengthening hopes that the dismal fourth quarter GDP data would be revised upwards.

The strong industrial and manufacturing data vindicated survey evidence, which has suggested that the recovery was stronger in the second half of 2009 than official data showed.

The Office for National Statistics said that the rise increased the chances that the country’s return to growth might have been slightly better than it had first estimated.

The wider industrial production measure also jumped 0.5 per cent on the previous month, easily beating consensus expectations for a 0.2 per cent rise.

Hetal Mehta, senior economic adviser to the Ernst & Young ITEM Club, said: “The UK has been lagging behind other countries in its manufacturing output bounce-back – output has been suspiciously below the levels implied by survey indicators, so the strong growth is consistent with our expectations of a catch up.”

However, economists warned against any complacency that the manufacturing sector’s recovery was on track. BNP Paribas’ Alan Clarke pointed out that the level of output collapsed 15 per cent and the UK has barely recovered from this low.