UK industrial output rises

City A.M. Reporter
Manufacturing output unexpectedly fell in December, but a surge in energy production due to the cold weather meant that overall industrial output rose as expected, official data showed.

The Office for National Statistics said that manufacturing output fell 0.1 per cent in December after a 0.6 per cent rise in November. Analysts had forecast a rise of 0.4 per cent.

It said there was minimal anecdotal evidence of any impact from the heavy snowfall in the month, apart from in utilities and materials used by the building trade.

However, the wider industrial output measure rose by 0.5 per cent as expected.

The ONS said December's data did not point to any revision of its initial estimate of a 0.5 per cent contraction in total economic output in the last three months of 2010.

It said one of the main drivers of the fall in factory output was the production of bricks, cement, plaster and other "non-metallic minerals" mainly used in the construction industry, which fell at their fastest pace since 1979.

This decline was offset, however, by a 6.1 per cent rise in electricity, gas and water output -- the biggest monthly increase since May 2007.

Manufacturing output was the only bright spot in the British economy at the end of 2010, when services and construction activity was heavily hit by the coldest December in 100 years.

Earlier manufacturing PMI surveys had suggested that activity rose at its fastest pace in at least 16 years in December and January.

The government and Bank of England are relying on strong export-driven growth in manufacturing in 2011 to fill the gap created by cuts in government spending and likely belt-tightening by consumers.

However, trade data released on Wednesday showed that Britain's deficit in goods with the rest of the world hit a record high in December – albeit partly due to weather disruption to exports and a one-off jump in aircraft imports.