Belfast Telegraph

Manufacturing output up by nearly 2% as factories power ahead

By john collingridge

There was further cheer over the UK recovery as official figures showed factories sprung back into life in June with the sharpest rise in manufacturing output for nearly a year.

Manufacturing output rose 1.9% on a month earlier, reversing falls in April and May, while overall production was up 1.1% month-on-month.

All parts of manufacturing – spanning car to food-manufacturers – grew monthly output for the first time in more than 20 years, according to figures from the Office for National Statistics.

Economists said it was the "most convincing sign yet" that all sectors of the economy are recovering, although they warned factories will struggle to maintain this pace of growth.

The official data follows recent upbeat industry surveys for July which have signalled growth across manufacturing, construction and services.

The 1.9% month-on-month rise in manufacturing was the steepest since July last year and was well ahead of economists' expectations of a 1% increase.

Lee Hopley, chief economist at manufacturers' organisation the EEF, said the figures "give further weight to the view that manufacturing activity will continue to gain pace, becoming a more important contributor to growth in the year ahead".

Industrial production in June was up 1.2% compared with June 2012 – its fastest year-on-year growth for two and a half years.

Transport equipment makers gave the biggest boost to factory output, with a 5.3% month-on-month increase. There was also a 3.1% rise in the manufacture of electronic and optical products. All 13 manufacturing sub-sectors increased output from May – the first time since 1992.

But warmer temperatures saw people turn off the heating, knocking output from gas and electricity firms by 5.8% month on month.

Recent figures showed the economy expanded by 0.6% overall in the second quarter, with production rising by the same percentage.

Samuel Tombs, economist at Capital Economics, said: "June's surge in industrial production was the most convincing sign yet that the sector is sharing in the recovery in the rest of the economy.

"While industry will struggle to replicate June's strong growth, a gradual recovery in production now appears to be taking place."

Howard Archer, chief UK and European economist at IHS Global Insight, said it was another "very good news day for the UK economy".

Stronger-than-expected output from UK factories will ease pressure on the Bank of England to pump more money into the economy.

Belfast Telegraph