Output growth slows down

ECONOMICS: Diane Coyle reports on the latest developments on both sides of the Atlantic

Industrial production jumped in March, thanks to big increases in energy output and oil extraction. But official figures published yesterday showed output growth was slowing as the Chancellor argued in defence of his surprise decision not to raise base rates last week.

The pound brought him more relief, climbing more than 3 pfennigs to nearly DM2.27, its highest in two months.

Analysts said sterling's move and the production figures were not enough to vindicate Mr Clarke, however.

Total industrial output leapt 0.9 per cent in March, taking it 5 per cent higher than a year earlier. In the first three months of the year, it rose by a mere 0.1 per cent.

Electricity, gas and water output rose 5.4 per cent in the month. This unusual jump was a bounce back from a depressed February, which was as grey as ever but unseasonably warm this year. In addition, oil and gas extraction reached another new record, continuing strong growth.

Manufacturing output rose 0.3 per cent in March to a level 3.8 per cent higher than a year earlier. It fell 0.1 per cent in the first quarter. Production was either flat or down in all except two sectors.

In coke, refining, petrol and nuclear fuels, it was up 10.2 per cent, accounting for most of the month's increase in the manufacturing total. Chemicals output was up 0.2 per cent.

The Treasury said the figures were consistent with growth in the economy slowing to a more sustainable rate. For some City analysts, on the other hand, this was too strong a conclusion due to a puzzle in the economic data.

The official figures for manufacturing output are far weaker than both recent business surveys and the statistics showing big gains in manufacturing employment would suggest.

In its recent quarterly Inflation Report, the Bank of England said its own regional agents had observed rises in manufacturing output in the first quarter.

''We can't really conclude that the economy is slowing enough,'' said Marian Bell, an economist at the Royal Bank of Scotland. She suggested output growth could be slowing simply because companies were operating near full capacity, which would become very ominous news for inflation.

Michael Saunders at investment bank Salomon Brothers said: ''All the other figures we have seen are certainly more buoyant than these. They aren't enough to get the Chancellor off the hook.''

Attention will focus next on a stream of economic statistics out next week - factory gate prices on Monday, unemployment and average earnings on Wednesday and retail sales on Thursday.

Ciarn Barr, UK economist at Morgan Grenfell, said: ''Next week could be decisive for whether we get a base rate rise in June.''

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence