Manufacturing lifts UK growth in first quarter
BRITAIN’S economic growth numbers could be upgraded as manufacturing and industrial numbers yesterday showed healthy growth in March.
Initial estimates of GDP are put together using just 40 per cent of the data, leading to substantial revisions to the numbers.
Official figures yesterday show manufacturing output increased 0.4 per cent from February to March, while total production output increased by 0.5 per cent on the month.
These numbers contrast sharply with the first estimate of GDP, which showed a fall of 0.1 per cent in production output in the quarter.
Such weak performance had helped GDP growth slow from 0.6 per cent to 0.3 per cent, rather than accelerating as other surveys had predicted.
“This is the biggest monthly increase in six months,” said economist James Knightley from ING. “We could see a modest upward revision to the 0.3 per cent quarterly GDP figure.”
“However, as the sector accounts for less than 15 per cent of UK output, it will very much depend on what happens to subsequent services and construction numbers. But today’s report is a positive outcome, and with business surveys offering encouragement and political uncertainty having diminished, prospects for industry look reasonably good, albeit with risks from sterling’s recent strong run.”
The biggest growth came in mining and quarrying, which increased by 2.6 per cent on the month.
Other positive reports came from sectors such as basic pharmaceutical products and pharmaceutical preparations; other manufacturing and repair; and rubber, plastic products and other non-metallic mineral products.
But despite the growth in the month, the sectors remain far smaller than they were before the crash.
Manufacturing output has fallen 4.8 per cent since its peak in the first quarter of 2008, while production output is down 10.2 per cent.
This contrasts starkly with services output, which has climbed to help push overall economic output well above that pre-crash level.
Economists hope the figures in other sectors will also be revised up, indicating a healthier economic outlook.
“We suspect that construction output will eventually be revised up from the currently reported 1.6 per cent quarter-on-quarter drop in the first quarter, as this looks markedly at odds with relatively decent survey evidence and the ONS has admitted that there are problems with the construction data,” said Howard Archer from IHS Global Insight.