March makes good news for the makers

Posted on 11 May 2012

UK manufacturing output rose 0.9% in March after a fall of 1.1% in February.

The figure was better than expects with the chemicals, transport equipment, computer and electronics sectors behind the recovery according to the Office for National Statistics.

However, production levels were down by 2.6% in March 2012 compared with March 2011. Chris Williamson, chief economist at Markit, the producer of the Purchasing Managers Index (PMI), warned the sector is struggling to grow with weak domestic demand, a recession across Europe and weaker than expected growth rates in export markets.

Mr Williamson said: “The US has been something of a bright spot for exporters, but even there signs have appeared to show growth weakening. At the same time, demand at home clearly remains very subdued amid ongoing low levels of business and consumer confidence. There appear to be very few sources of new sales growth for UK producers at the moment.”

However, he added that the figures also provided some reassurance that UK manufacturing is “not on its knees.”

Andrew Johnson, senior economist at the manufacturers’ organisation EEF, said that the release from the ONS “paints a slightly improved picture for manufacturing.”

“This brings the official data closer to a range of business surveys and suggests manufacturing is in a better position at the start of this year than it was at the end of 2011,” he added before stating that although the economy is not on its knees, it is by no means on its feet.

“The mixed picture across individual sectors suggests we are some way yet from establishing a strong and consistent growth path,” Johnson concluded.