UK rates on hold as output rises

Click to follow
The Independent Online

Britain's industrial output rose for the third consecutive month in January, marking the longest period of growth in nearly four years and raising hopes of a revival in the sector. The government figures came as the Bank of England left interest rates unchanged at 4.5 per cent for the seventh month in a row.

Industrial production, a measure that comprises manufacturing, energy and mineral extraction, beat City expectations and rose 0.4 per cent in January compared with December. Manufacturers also enjoyed three months of expansion. The sector boosted output by 0.2 per cent in January.

Andy Martin, the national director of manufacturing at Barclays Bank, said: "This is the first time in a long while that all the industry barometers are broadly aligned... The figures point to a possible revival in the sector's fortunes."

Manufacturers are benefiting from strengthening growth in the rest of Europe, separate figures showed. Exports to the European Union jumped 3.5 per cent in January, narrowing the trade deficit with the EU to £2bn from £2.9bn in December. But the position with the rest of the world worsened to a record gap of £3.7bn. The oil balance swung back into the red at £124m. Britain has traditionally been a net oil exporter because of its North Sea fields but last year marked the first full-year deficit in oil since 1979.

Figures for fourth-quarter industrial production were revised lower, which could knock 0.02 percentage points off the estimates for economic growth.