Manufacturing growth gathers pace to banish snow woes

MANUFACTURING grew at one of its fastest rates for almost 20 years in January as the industry picked up from the snow-induced downturn before Christmas, latest figures have shown.

According to the Office for National Statistics, the seasonally adjusted index of manufacturing in January rose by 6.8% compared with the corresponding month in 2010.

There was a 1% month-on-month increase from December and for the last three months on a year earlier, the figure rose by 5.5%.

Output increased in 12 of the 13 manufacturing sub-sectors, with the largest increases in the electrical and optical equipment industries – which rose by 14.6% – and the transport equipment industries (12%).

Within the electrical and optical equipment industries, the main rises were in the manufacture of accumulators, batteries, lighting electrical equipment (36.3%) and machinery and computers (23.8%).

In the transport equipment industries, motor vehicle production grew 19.6%, while the supporting motor vehicle bodies, trailer and parts and engine parts sectors, a 17.6% increase was recorded.

EEF Midlands Region Director Richard Halstead said the figures gave rise to optimism for the remainder of 2011.

“Manufacturing more than made up in the dip in output at the end of 2010. Taken with the other positive indicators from the sector since the start of the year, manufacturing should continue to be one of the bright spots in the economy in the first quarter,” he said.

Beyond that, he said there remained some caution and manufacturers would be looking to the Budget later this month to lay the foundations for the stable tax and regulatory environment that would help underpin long term investment and growth.

Nida Ali, economic advisor to the Ernst & Young ITEM Club, said the rise had been predictable as firms looked to make up lost ground from December.

“However, even without the post snow catch-up, the manufacturing sector looks to be in good health and is leading the recovery.

“This trend is likely to continue over the coming year, driven by sustained strength in export demand,” she said.

David Kern, chief economist at the British Chambers of Commerce (BCC), said it was encouraging to see stronger figures than were expected.

“Although comparisons are slightly distorted by the severe weather in December, the underlying trends are undoubtedly positive. The manufacturing recovery is gathering momentum, and this data supports our belief that economic growth is positive in the current quarter, after the setback at the end of last year.

“In conjunction with positive trade figures, it looks hopeful that the rebalancing of the UK economy is set to continue,” he said.