U.K. industrial production unexpectedly rose in April, boosted by increased output at oil and water companies. Manufacturing fell after gains in February and March.
Output at factories, utilities and mines rose 0.1 percent from March, the Office for National Statistics said today in London. The median forecast of 28 economists in a Bloomberg News survey was for no change. Manufacturing dropped 0.2 percent after gains averaging 0.9 percent in the previous two months.
Industrial output posted its strongest quarterly performance in almost three years through April, adding to signs the economy is gaining momentum after returning to growth in the first quarter. Surveys by Markit Economics published this month showed services and manufacturing were at the highest in 14 months in May. The euro area, Britain’s largest trading partner, is also showing signs of improvement, with European Central Bank President Mario Draghi saying last week the region’s economy will return to growth by the end of the year.
“The U.K. economy can and will get better,” said Rob Wood, an economist at Berenberg Bank in London. “Today’s industrial production data suggest the sector will contribute positively to growth in the second quarter.”
The pound fell after the data were published, and traded at $1.5553 at 10:43 a.m. in London, down 0.1 percent from yesterday.
In the three months through April, industrial production gained 0.8 percent, the largest increase since July 2010, the ONS said. Manufacturing rose 0.5 percent, the most since September last year. From a year earlier, manufacturing fell 0.5 percent and industrial production declined 0.6 percent.
Out of 13 categories in manufacturing, 10 declined in April, while three increased. The fall on the month was led by transport equipment. There were also declines in the output of wood and paper products and basic metals and metal goods. The declines were largely offset by a 14 percent jump in pharmaceuticals production.
Mining output rose 0.9 percent on the month, with oil and gas extraction increasing 0.6 percent. Electricity and gas utilities cut output by 0.2 percent, reflecting the return of warmer weather in April and a switch to coal, the ONS said. Water supply increased 1.5 percent.
The U.K. returned to growth in the first quarter with expansion of 0.3 percent, and the BOE forecasts 0.5 percent growth in the current period. A house-price gauge rose in May to a three-year high as government credit-easing programs revived buyer interest across the country, the Royal Institution of Chartered Surveyors said.
Growth nevertheless remains fragile, with lending by banks declining in the first quarter despite an extension of the bank’s Funding for Lending Scheme in April and increased incentives to get credit to smaller companies.
Separate data from the central bank today showed the overall value of outstanding residential loans fell 0.1 percent in the first quarter from the previous three months, the first decline in two years.
The Bank of England’s Monetary Policy Committee last week kept its bond-purchase program at 375 billion pounds ($583 billion) and the benchmark interest rate at a record-low 0.5 percent.
In Asia today, reports showed Philippine exports fell in April from a year earlier while the jobless rate rose to 7.5 percent. Malaysian industrial production climbed 4.7 percent from a year earlier the same month.