Industrial output rises, but experts warn against early optimism

The figures from the Office for National Statistics show that while industrial output remains 11% behind the level this time last year, the trend is positive and mirrors other sector statistics released earlier this week, such as the CIPS Purchasing Managers' Index. Sectors recording the most significant rises in June were transport equipment (4.1%) and electrical and optical equipment (2.5%). Commenting on the ONS announcement, Lee Hopley, head of economic policy at EEF, said: "While cautious about placing too much weight on one month's data, these figures continue the recent pattern showing that industry may be through the worst. Rapid stock adjustments and a more favourable exchange rate will be helping production levels, which still remain significantly below pre-recession levels, but manufacturers will need to see clear signs of a pick up in global demand before a degree of confidence returns to the sector." Picking up on this point, Graeme Allinson, head of manufacturing, transport and logistics at Barclays, said: "Although today's figures indicate a healthy move in the right direction, businesses that we talk to on a daily basis are watching for more long term trends around these statistics, pointing towards a sustained increase in demand. The general uplift in the economic markets parallels the positives coming out of the manufacturing sector and the real test of whether these figures are taking things in the right direction will be seen in the long term, not in the here and now." Allinson added: "As well as the ONS figures' welcome news, the PMI (Purchasing Managers Index) data for July has presented the first manufacturing expansion since March 2008, and importantly similar increases are visible around the world. The current levels of sterling against the euro will help to sustain UK production levels. British goods entering the eurozone remain a value proposition, bolstering their competitiveness as global production moves forward."