Factory jump raises chance of a recovery
UK MANUFACTURING output jumped higher than predicted in December, data from the Office for National Statistics (ONS) showed yesterday, leading some economists to suggest the economy may be back on the track to recovery.
The production industries as a whole, which includes manufacturing, mining and energy, registered a small rise in output in the month and a decline on the year.
The ONS’ index of manufacturing rose one per cent on the month and 0.8 per cent compared with December 2010, with total output for 2011 coming in 2.1 per cent higher than 2010.
Production industries’ overall expanded by 0.5 per cent from November to December but declined 3.3 per cent compared with the same month of 2010, and 2011’s total output was 1.3 per cent lower than 2010’s.
“The news that manufacturing output soared in December lends credibility to stronger survey readings recently, especially the purchasing managers’ indices,” said Investec’s Philip Shaw.
“As things stand there seems to be a good chance that the economy will expand again in the first quarter of this year following a 0.2 per cent contraction in the fourth quarter. This means we would need to upgrade our 2012 GDP forecast which currently stands at 0.4 per cent.”
Meanwhile, the National Institute for Economic and Social Research (NIESR) estimated that the economy contracted 0.2 per cent in the three months to January, continuing the decline in GDP seen at the end of 2011.
“These estimates suggest output has been flat since October 2011,” NIESR’s report said.
“We expect the UK economy to remain flat over the course of this year before recovery takes hold in 2013.”