Growth picks up as oil boosts industrial output

Niesr said growth over the quarter was 0.4 per cent, up from 0.3 per cent in the three months to March, suggesting a tentative bounce-back

Manufacturing output figures from the Office for National Statistics showed a 0.5 per cent expansion in industrial output in March (Mark Pinder)

The economy picked up slightly in the three months to April, according to the latest projection from the National Institute for Economic and Social Research (Niesr), lifting hopes that the slowdown in the first quarter was merely a blip.

Niesr said growth over the quarter was 0.4 per cent, up from 0.3 per cent in the three months to March, suggesting a tentative bounce-back. That brightening picture was reinforced by the latest manufacturing output figures from the Office for National Statistics which showed a 0.5 per cent expansion in industrial output in March.

City analysts had expected a flat-lining in industrial output, and the data, which reflected a surprisingly strong performance from the oil and gas sector despite recent low oil prices, helped lift the pound to its highest level against the dollar so far this year at $1.57.

The decent March performance helped industrial production for the first quarter as whole grow by 0.1 per cent, better than the 0.1 per cent fall the ONS had initially estimated, although not sufficient to revise the overall GDP growth figure.

Manufacturing grew by 0.4 per cent in the month.

“The support to the UK’s producers from cheap oil, record low borrowing costs and a pick-up in the eurozone economy suggests that March’s decent performance should be repeated in the months to come” said Martin Beck of the EY Item Club.

Separately, the price of UK Gilts fell sharply, caught up in the global sales of ultra-safe assets, with the 10-year yield rising above 2.05 per cent at one point, before settling back down at 1.99 per cent.