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Surprise 2% increase in industrial output

Industrial output in the UK increased by 2.0% between February and March and also rose by 2.0% on the year to March 2010. This compares to analysts’ forecasts of a rise of around 0.3-0.4%.

In fact, the Office for National Statistics had estimated that production would rise by 0.7% when they initially announced the GDP growth figures for the first quarter. Since the actual figure for output is now much greater, we can expect GDP figures to rise from 0.3 to 0.4% growth in the first quarter, when revised GDP statistics are published on 25th May.

There was also a spectacular turnaround in manufacturing output which rose by 2.3% between February and March, to leave the March figure 3.3% higher than a year earlier.

The recent changes in manufacturing can be seen in the graphic below.

Index of Manufacturing Source: ONS

Between February and March output increased in 12 of the 13 sub-sectors which are measured, with the largest contribution being the 3.9% rise in basic metal and metal products industries. This is particularly pleasing as apart from the 0.5% fall in textiles and clothing, this shows that the recovery in manufacturing is broad-based across the economy.

Manufacturing was boosted particularly by a strong export demand which in turn was stimulated by the weakness of sterling.

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Posted in economic growth, industrial production, Manufacturing, sterling

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