Manufacturing output delivers weak performance


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The Independent Online

Fears that the recovery in the manufacturing sector is starting to lose steam were fuelled today by lacklustre industrial growth figures.

The Office for National Statistics (ONS) said manufacturing output rose by 0.1% between December and January, a much weaker performance than the 1% jump reported for the previous month.

In industrial output, which includes the mining and quarrying sectors, production fell by 0.4% on the prior month.

David Kern, chief economist at the British Chambers of Commerce, said the weaker-than-expected figures were a reminder of the need for measures in this month's Budget to boost the economic recovery.

He added: "Output has been virtually stagnant and although the economy has likely returned to positive growth in the first quarter, any improvement will be very weak.

"But we mustn't be too gloomy. A period of sluggish growth is to be expected at a time when tough austerity measures are being implemented, and the eurozone's problems create challenges for our exporters."

There was some comfort for manufacturers as separate figures showed that firms passed on a decent proportion of the recent increase in oil prices to customers during February.

The ONS said production output prices rose by 0.6% in February, the biggest increase since April.

However, Capital Economics analyst Samuel Tombs warned: "We struggle to see how producers will manage to keep pushing through price increases if demand remains this weak."

Input prices rose 2.5% and fuelled worries that higher oil prices will derail the Bank of England's expectations for inflation below 2% later this year.