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Recovery dented by factory output slide

By John-Paul Ford Rojas

Published 11/06/2015

Economist: Chris Williamson
Economist: Chris Williamson

Hopes for putting Britain's factories at the centre of the recovery have suffered a setback as figures showed the manufacturing sector shrank in April.

A 0.4% decline reported by the Office for National Statistics (ONS) cancels out an improvement of the same rate in the previous month.

The wider industrial production sector did better than expected with an increase of 0.4%, buoyed by an improvement in North Sea oil and gas production - helping boost the pound.

Sterling added a cent against the dollar after the figures.

But the slump in manufacturing dents hopes of a rebalancing of the recovery, which is being led by consumer spending and the dominant services sector.

The ONS said manufacturing in the three months to April was 4.4% below its level at the start of the recession in 2008.

Its year-on-year growth of 0.2% in April was the slowest since September 2013.

A month-on-month decline was led by weakness in pharmaceuticals production, following a sharp increase in March.

Experts were divided on how the figures would impact on overall second quarter gross domestic product (GDP) growth after it slowed down sharply to 0.3% in the first three months of the year.

Meanwhile it was suggested that the weakness in manufacturing in April could have been affected by uncertainty ahead of May's general election.

Markit chief economist Chris Williamson said it was a "very disappointing start to the second quarter".

He said the data "cast doubt on widespread expectations that the economy is picking up speed after the sluggish start to the year".

"The better than expected improvement in the headline industrial production number masks a worrying downturn in factory output, which is a better barometer of the underlying health of the industrial sector."

Belfast Telegraph

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