Industrial output up in February but trend still disappoints

INDUSTRIAL output rose by more than expected during February, easing fears of a return to recession. However, the situation is still worse than 12 months ago, prompting several analysts to express their concern that the economic climate remains volatile.

Figures from the Office for National Statistics show production rose by 1% in February compared with January. However, the figure was still down 2.2% on the same month last year.

While manufacturing output was up 0.8% last month compared with January, the latest trade figures showed that the UK’s balance of trade deficit widened in February.

Mike Rigby, Head of Manufacturing at Barclays, said there were downward contributions from all sectors with manufacturing and mining & quarrying the most significant.

“Today’s figures will do little to alleviate concerns around a possible triple-dip recession. We are however seeing optimistic investment plans from our customers for this year, but whether these will be realised, particularly as external challenges persist, remains to be seen,” he said.
 
Richard Halstead, Midlands Region Director at EEF, said: “The ups and downs in the monthly production data continued in February with a partial reversal of January’s big fall in manufacturing. Notable month on month gains in output were seen across transport, metals and investment goods.

“While many manufacturers are increasing efforts to grow in new markets, another round of weak trade data suggests challenging conditions persist across a number of key markets. In line with much of the survey data we’ve seen since the start of the year it looks like industry will struggle to make a positive contribution to overall growth in the first quarter of 2013.”

Jim Bligh, CBI Head of Exports policy, added: “This month’s trade figures reveal a disappointing fall in exports to non-EU countries and a worrying downward trend overall.

“These figures underscore the need for businesses to explore new high growth markets.”