UK manufacturing bounces back

City A.M. Reporter
Manufacturing output rose at its fastest pace in over a year in May as factories ramped up output after a Royal Wedding-related drop in April, official data showed.

Industrial output, however, failed to fully recoup April's losses and the figures are unlikely to alter expectations that the Bank of England will leave interest rates at 0.5 per cent for some months to come.

The Office for National Statistics said that manufacturing output – which does not include utilities or oil and gas extraction – rose by 1.8 per cent in May, after a downwardly revised drop of 1.6 per cent in April.

That beat forecasts for a 1.0 per cent rise and was the strongest showing since March 2010.

The wider measure of industrial output rose by a below-forecast 0.9 per cent in May, making up only half of April's drop. A sharp fall in oil and gas production due to unplanned maintenance work was largely to blame.

Britain's manufacturing sector has been one of the few bright spots in the economy, which otherwise appears to be struggling to gain momentum.

Surveys of services, manufacturing and construction this week suggest the economy grew just 0.3 per cent in the second quarter after a disappointing reading of 0.5 per cent in the first three months of the year.

Assessing the strength of the recovery has been complicated, however, by the extra public holiday for the Royal Wedding on 29 April.

In addition, many manufacturers have been hit by supply chain disruptions caused by Japan's earthquake and Tsunami in March.

"The rise in May is likely to be affected by April being a weak month due to a number of one-off events," the ONS said.

The statistics office said the effects of the Japanese tsunami on UK manufacturing diminished in May.

A number of car manufacturers indicated that sales were getting back towards normal levels.