U.K. Manufacturing Output Grows More Than ForecastJennifer Ryan
U.K. factory production rose more than forecast in January, adding to evidence of what Bank of England Governor Mark Carney said is a broadening recovery.
Output rose 0.4 percent from December, when it also gained that amount, the Office for National Statistics said today in London. The median of 25 estimates in a Bloomberg News survey was for 0.3 percent growth. Industrial production, which includes utilities and mines, rose 0.1 percent -- less than the 0.2 percent forecast -- as bad weather hit oil and gas output.
A recovery is under way in the U.K., though investment and exports need to keep growing for it to be sustained, Carney told lawmakers today. Officials have pledged to hold the key interest rate at a record low 0.5 percent at least until unemployment, now at 7.2 percent, falls to 7 percent.
“The strength of the recent surveys suggests that the recovery in manufacturing output should at least maintain its recent pace in the coming months,” said Samuel Tombs, an economist at Capital Economics Ltd. in London. “All in all, then, January’s industrial production figures bring further encouraging signs that the economic recovery is broad based.
Nine out of 13 manufacturing sectors increased production, led by a 6.2 percent gain in output of rubber and plastic products, the ONS said. Downward pressure came from a 13.9 percent drop in pharmaceuticals production, the biggest monthly decline since 1968.
Carney reiterated today that increases in borrowing costs will be ‘‘gradual’’ and ‘‘limited’’ when they come.
Policy makers are ‘‘not complacent about the recovery’’ as ‘‘we don’t see the recovery sustaining itself unless investment picks up’’ and there’s an improvement in net exports, Carney told Parliament’s Treasury Committee. Recent data ‘‘provide some support of the broadening of the recovery to business investment, but it’s at early stages,” he said.
Deputy Governor Charles Bean said yesterday a sustained recovery will require a shift to net exports, and a stronger currency would “not be particularly helpful” in facilitating rebalancing, he said. Sterling has gained about 10 percent on a trade-weighted basis since March. It lost about 25 percent at the start of the financial crisis.
Mining and quarrying fell 3.4 percent in January from December, with crude oil and natural gas extraction dropping 5.8 percent as severe weather in the North Sea hampered production, the ONS said.
The increase in industrial production left output 12.4 percent below the pre-recession level of early 2008. In the quarter through January, both industrial production and manufacturing output gained 0.7 percent compared with the previous three months.