Output dip casts doubt on prospect for rates rise

Manufacturing output fell unexpectedly in November but retail sales bounced back in December. The continuing mixed signals on the economy left expert opinion as divided as ever about whether or not interest rates will rise next month. Diane Coyle and Nigel Cope report.

There was support for almost any view about the British economy's prospects from yesterday's batch of surveys and statistics. Official figures showed that industrial production fell by an unexpectedly steep 0.6 per cent in November. Much of this was the fault of warm weather cutting energy output, but manufacturing also declined by 0.4 per cent.

Although its annual growth rate remained unchanged at 1.5 per cent, manufacturing has been virtually flat since July. The sector makes up just one-fifth of the economy, but its weakness suggested that fourth-quarter GDP will show a slowdown.

Analysts said yesterday's disappointing figures indicated the impact of the strong pound on exports. For the first time higher value industries such as engineering, which do not compete on price alone, were starting to slow down markedly.

Separate figures for prices paid by manufacturers for materials and charged by them at the factory gate showed that inflationary pressure at the start of the prices pipeline remained extremely subdued in December.

However, there was evidence that profit margins might have increased. Producer output prices jumped 0.4 per cent last month, taking their year- on-year change up a shade to 1.0 per cent. Prices paid for inputs fell 1.4 per cent during the month to a level 9.5 per cent lower than a year earlier.

Economists said some companies were using strong demand at home partially to offset the squeeze on profit margins. But figures for retail price inflation, due today, are expected to show a small fall in the target measure.

There was more evidence for the strength of home demand in the latest survey of the high street. The British Retail Consortium reported a surge in December sales after a weak November.

Sales rose 7.9 per cent last month, according to the survey, or 4.8 for a like-for-like basis, compared to just 4.4 per cent (1.1 per cent like- for-like) the previous month.

The figures showed a month of two halves with sales in the first two weeks continuing at November's weak level before a last minute surge in the last week before Christmas. Sales were particularly strong in the final four shopping days.

Next, the high street and mail order fashion group, provided further cheer for the retail sector with better than expected figures. It said retail sales in the 31 weeks to 24 December were16 per cent higher on 11 per cent more sales space.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Financial Director / FD / Senior Finance Manager

Up to 70k DOE: Guru Careers: We are seeking an experienced Financial Director ...

Recruitment Genius: Junior / Apprentice Sales Executives - OTE £50,000

£11000 - £50000 per annum: Recruitment Genius: This financial company offer ma...

SThree: Recruitment Consultant

competitive + incentives + uncapped comms: SThree: Did you know? 98% of our di...

SThree: Trainee Recruitment Consultant

competitive: SThree: Did you know? 98% of our directors started with SThree as...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen