UK production rises to meet trade deficit challenge

Posted on 9 Feb 2012 by The Manufacturer

Index of production figures, released today, show a 1% rise in manufacturing output in December 2011 and a 0.5% rise in overall industrial output.

The Office for National Statistics said that this increase was unexpectedly high having forecast just 0.2% growth. Industrial output accounts for around 15% of the UK economy.

The positive news on UK manufacturing productivity comes alongside an announcement that the UKs trade deficit shrank in December 2011 to the smallest sum since April 2003. The latest figures show a deficit of £1.1bn in December compared to £2.8bn in November.

EEF chief economist, Lee Hopley attributed this closing gap to an optimistic trend in manufacturing exports saying: “Overall goods exports reached a record level at the end of last year, making some headway into the overall trade deficit and pointing to encouraging signs of rebalancing across the economy.”

Ms Hopley continued to say that it is critical this upward trend in both productivity and exports continues through 2012, but other commentators warned that there will be challenges to achieving this.

Mark Lee, head of manufacturing for Barclays Corporate said: “While we continue to see tentative signs of an uptick in manufacturing activity, capital investment remains frustratingly low amongst both manufacturers and across the UK economy as a whole.

“With consumer spending weak, cash rich companies need to start putting their hand in
their pockets if we are to see this nascent industrial upturn gather pace.”