U.K. Manufacturing Rises More Than ForecastJennifer Ryan and Fergal O’Brien
U.K. manufacturing production expanded more than economists forecast in March, adding to evidence that the economic recovery is gathering strength.
Output rose 0.5 percent from February, when it gained 1 percent, the Office for National Statistics said today. Economists forecast a gain of 0.3 percent, based on the median of 21 estimates in a Bloomberg survey. Industrial production fell 0.1 percent as oil and gas extraction plunged, though the decline was less than estimated.
Economic growth accelerated to 0.8 percent in the first quarter and industry surveys this month point to continued expansion in April. The Organisation for Economic Cooperation and Development raised its 2014 U.K. forecast this month, while the Bank of England, which kept its key interest rate unchanged yesterday, will update its own projections next week.
The data are “consistent with the U.K. economy gaining momentum,” said James Knightley, an economist at ING Bank NV in London. They “offer more support to those looking for earlier BOE rate hikes.”
In the first quarter, industrial production rose 0.7 percent, less than the 0.8 percent estimated in provisional gross domestic product data last month. Manufacturing rose 1.4 percent instead of 1.3 percent. That’s the biggest quarterly increase since 2010.
In March, construction fell 1 percent from February and was up 6.4 percent from a year earlier. It rose 0.6 percent in the first quarter, double the gain estimated in the GDP report.
The ONS said the revisions to construction and industrial production have a negligible impact on the initial GDP estimate.
The pound fell 0.3 percent to $1.6878 as of 12:31 p.m. London time. It rose to $1.6996 earlier this week, the highest since 2009.
From a year earlier, industrial production increased 2.3 percent in March and manufacturing rose 3.3 percent, today’s data showed. Industrial output remains 11.6 percent below where it was when GDP peaked in the first quarter of 2008.
Within manufacturing, 10 of 13 categories rose in March from February, with the largest contribution coming from basic pharmaceuticals, the ONS said. There were also increases in output of food and drink and transport equipment.
In a separate report, the ONS said the trade deficit on goods narrowed to 8.48 billion pounds ($14.3 billion) in March from 8.75 billion pounds in February. Exports rose 4.9 percent, with shipments to both European Union countries and those outside the bloc rising. Imports gained 2.8 percent, driven by purchases from non-EU states.
The total trade gap, which includes the surplus in services, narrowed to 5.21 billion pounds in the first quarter from 5.66 billion pounds in the fourth quarter. The narrowing suggests net trade contributed to GDP growth during the period.
(An earlier version of this story was corrected because it said the quarterly manufacturing gain was the biggest since 1999.)