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Manufacturers see surge in output

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Industrial production grew by 2 per cent in March, suggesting that the overall economy may be recovering at a faster rate than previously predicted.

Industrial output had only been expected to expand by 0.3 per cent in March. The 2 per cent figure is the strongest rate of growth since 2002.

The Office for National Statistics said that the surge in production would add as much as 0.1 per cent to the UK’s total GDP growth in the first quarter of the year.

Manufacturing production, which excludes energy production, also rose in the same period by 2.3 per cent, again the most impressive performance recorded since the summer of 2002.

The upturn has in part been stimulated by the weakness of sterling against other currencies, making British products more competitive abroad and boosting exports.

David Kern, chief economist at the British Chambers of Commerce, said: “These figures are much stronger than expected and reinforce hopes that GDP in the first quarter of 2010 will be revised upwards. But there is no room for complacency – the manufacturing sector is still fragile and it is important to support these signs of improvement.

“With a competitive exchange rate, UK manufacturers should be able to respond well to increased demand for exports.”

Lee Hopley, chief economist at the EEF, added: “We are now seeing a broad-based recovery for a sector hard hit by the recession, with robust manufacturing growth suggesting stronger than expected economic growth in the first quarter.

“Whilst manufacturing and exports are now providing the foundations for a sustained recovery and a better balanced economy, we can’t take this for granted. A stable government with a credible plan to repair the public finances is needed both to reassure financial markets and underpin a sustainable recovery.

Howard Archer, economist at IHS Global Insight, commented: “Manufacturers are currently clearly benefiting from a pick-up in demand both at home and, particularly, overseas, improved competitiveness in both domestic and foreign markets stemming from the weak pound, and leaner stock levels.

“The key question is though: can manufacturers sustain healthy growth over the medium term, particularly as stimulative measures are withdrawn?”