Manufacturing rebound fails to offset consumer slowdown

The Office for National Statistics revised down its initial growth estimate of 0.64 per cent to 0.56 per cent. The published figure was unchanged at 0.6 per cent.

The figures showed a rebound in manufacturing output and business investment failed to offset a marked slowdown in consumer spending in high street shops and travel agents.

Household spending grew by 0.2 per cent, down from 0.7 per cent in the final quarter of last year and the slowest since the first months of 2005. "The detail ... betrays something of a soft underbelly," said Ross Walker, UK economist at Royal Bank of Scotland.

The ONS revised up its estimate of output from the production sector of the economy from 0.8 to 0.9 per cent, thanks to an uplift for manufacturing from 0.5 to 0.7 per cent.

While the output of the services was left unrevised at 0.6 per cent,growth in transport and communications was cut to 0.6 per cent from the first estimate of 0.9 per cent and growth of 1.4 per cent in the final months of 2005.

The ONS confirmed retail sales fell 0.6 per cent in the first quarter.

The widening trade deficit knocked 0.4 per cent off growth, which was supported by a strong contribution from stockbuilding.

Statisticians at the ONS citedevidence of heavy stockbuilding by wholesalers. Analysts said this pointed to a pre-World Cup surge in retail sales as football fans flocked to buy flat-screen TVs.

"It is very possible the second quarter will see stronger activity with consumer spending being lifted by sales related to the World Cup," Howard Archer, the chief UK economist at Global Insight, said.

In a separate development, hopes of a sustained revival in manufacturing were dented by figures showing that car production dipped last month. There were 15.2 per cent fewer vehicles manufactured than in April 2005, the ONS said.

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