Official figures from the Office for National Statistics released today show Britain’s industrial output was up 0.3 per cent in April – its first rise in over a year.
Manufacturing output was up 0.2 per cent, leading analysts to believe de-stocking measures taken by UK factories in light of lower demand and financial insecurity are now complete and that the production lines are starting up again.
Manufacturing index
On a quarterly basis though, overall output is still down 3.2 per cent on the previous three months and 12.6% on the same period year before.
In April, output from the transport equipment industries rose 3.2 per cent. However, this rise followed horrendous declines in the preceding months and the sector was still 7.6 per cent down for the quarter. The biggest quarterly increases were 2.3 per cent in the chemical and man-made fibres industries and 1.6 per cent in the paper, printing and publishing industries.
Basic metals and metal product industries continued to suffer and registered a further decline of 2.2 per cent in April. The sector was 6.5 per cent down for the quarter.
The general consensus among analysts is that while the output rise inspires some degree of optimism, further and more sustained positive figures are needed before an upturn can be declared.
“Manufacturing has stabilised and all the indications are that we have passed through the worst phase of the recession, said EEF head of economic policy, Lee Hopley. “However, conditions remain patchy and it remains far too early to begin talking of a sustained recovery. While the cheaper pound will make our exports more competitive, manufacturers are increasingly concerned by its volatility, while a sustained rise in oil prices will eat into margins and reduce the purchasing power of its customers.”
Graeme Allinson, head of manufacturing, transport and logistics at Barclays Commercial Bank, added: “Despite a 12.6 per cent decline in manufacturing year on year it is apparent that the rate of decline is continuing to slow with an encouraging monthly increase of 0.2 per cent.”
“Output levels cut as retail stocks were depleted in winter months are beginning to see the effect of a call to replenish stock. The May PMI (Purchasing Managers Index) echoes indication of the drive to build fresh stock, however it remains to be seen if this will translate into a sustained increase in demand.”
Allinson echoed recent calls to arms for firms to increase their efforts on exports.
“Better manufacturers are looking to diversify their supply chain and seek out new markets for their product,” he said. “Although the decline in manufacturing persists across Europe, exploiting the advantageous exchange rates with our biggest trading partners in the euro-zone will see the UK well positioned for a pick-up in demand.”
