Mobile phones and the internet boost output

Production of mobile telephones and telecommunications equipment led to a strong gain in industrial output in August, leading official statisticians to revise up their estimate of trend growth in manufacturing.

Production of mobile telephones and telecommunications equipment led to a strong gain in industrial output in August, leading official statisticians to revise up their estimate of trend growth in manufacturing.

Separate figures from the National Institute of Economic and Social Research yesterday showed GDP climbed by 1 per cent in the three months to September, and 3.8 per cent year on year. The estimates, although not adjusted for the petrol blockades, suggested official growth figures will show an acceleration to around 4 per cent in the third quarter of this year.

The fresh signs of buoyant growth came the day after the Bank of England opted to leave interest rates unchanged. "While the Monetary Policy Committee has missed the opportunity to raise interest rates this month, the data reinforce the chance of a rise before the end of the year," Garry Young of the National Institute said.

"The figures must surely bury the myth, peddled by industry lobby groups, of an industrial sector teetering on the brink of recession," said Richard Iley of ABN Amro.

However, Jonathan Loynes from Capital Economics described the increase as "a rare spurt of growth" in a fragile manufacturing sector. "Manufacturers are telling us they don't expect to raise prices," he said.

The National Statistics Office said manufacturing output had risen 0.8 per cent in August, taking year-on-year growth up to 1.1 per cent. Total industrial production, which also includes the output of the utilities and North Sea production, was up 0.6 per cent during the month and 1.6 per cent year on year.

The fortunes of different industries have diverged dramatically. Without a 4.1 per cent increase in the production of electrical and optical equipment, in the engineering sector, the total manufacturing gain would have been just 0.1 per cent.

Production of mobile phones and high-speed phone equipment soared 19 per cent, the fastest growth ever recorded. Computer manufacturing gained 5.5 per cent and chemicals, including pharmaceuticals, 1.7 per cent. By contrast, car production was down 3.8 per cent, textiles 0.5 per cent and metals 0.8 per cent.

"The disparities across manufacturing could hardly be more pronounced," said Geoffrey Dicks at Royal Bank of Scotland.

The statisticians revised up the trend growth in manufacturing output to 1.5 per cent, and in total industrial output to 2 per cent, both a full percentage point higher than before.

Jobs figures for last month also pointed to a renewal of strong growth in the US economy. The unemployment rate fell to 3.9 per cent, regaining its lowest level for 30 years after a modest rise during the summer. The number of people employed outside farming rose by 252,000.

However, the figures had a strong New Economy flavour as average earnings growth actually declined during the month.