U.K. Industrial Output Rises More Than Forecast on Oil Surge

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Total production increased 0.4 percent from March, the Office for National Statistics said in London on Wednesday.

Total production increased 0.4 percent from March, the Office for National Statistics said in London on Wednesday.

Photographer: Simon Dawson/Bloomberg

U.K. industrial production rose more than economists forecast in April as oil and gas output surged. Manufacturing unexpectedly contracted amid a decline in pharmaceuticals.

Total production increased 0.4 percent from March, the Office for National Statistics said in London on Wednesday. Economists in a Bloomberg survey had forecast a 0.1 percent gain. Oil and gas extraction jumped 8.7 percent, the biggest increase in more than a year. Factory output fell 0.4 percent. A 0.1 percent increase was forecast.

The decline in manufacturing highlights Britain’s reliance on domestic demand and consumption to fuel its recovery, which slowed in the first quarter to 0.3 percent. Data Tuesday showed that exports are likely to continue dragging on growth.

“Prospects for production over the rest of the second quarter look fairly subdued and exporters face an additional burden from signs that the euro-zone’s recovery may already be losing steam,” said Martin Beck, an economist at EY Item Club. “Notwithstanding their recent performance, the contribution of the ’makers’ to growth continues to look fairly uncertain.”

In the first quarter, industrial output rose 0.2 percent instead of the 0.1 percent previously estimated. The impact on gross domestic product is less than 0.05 percentage point, the ONS said. The economy’s rate of growth in the period was the least in more than two years.

Manufacturing Weakness

Pharmaceuticals output, which accounts for almost 9 percent of manufacturing, fell 6 percent in April following a 6.8 percent increase the previous month. Seven of 13 manufacturing sectors posted declines.

Oil production rose in April as several North Sea fields returned to full capacity. The pound advanced for a third day against the dollar and was up 0.6 percent at $1.5473 as of 11:15 a.m. London time.

The increase in total production is “tentatively good news for a rebound in GDP growth in the second quarter,” said Daniel Vernazza, an economist at Unicredit in London. “But oil extraction is volatile and the more enduring influence on economic growth will be the weakness in manufacturing.”

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