Manufacturing output dips but trend remains positive

Even though the new data showed that total manufacturing output rose by 0.2% in January compared to the same month a year ago – the first annual increase since March 2008 – January output was 0.9% lower than the previous month. Commenting on the figures, EEF chief economist, Lee Hopley, said: "January's drop in output is surprising given the raft of other survey data since the beginning of the year which has been more upbeat. Despite the blip at the beginning of the year the underlying trend is one of growth and the continued recovery in the world economy should underpin this in the months to come." At Barclays, head of UK manufacturing, transport and logistics Graeme Allinson, said the declines evident in the figures presented a much more restrained outlook than that presented by Chartered Institute for Purchasing and Supply's UK manufacturing Purchasing Manager Index released only last week. He went on: "The holding-pattern that UK manufacturing has found itself in throughout last year has not yet passed, however various manufacturing sectors show signs of breaking from this and the first positive year on year figure for some time points the way towards seeing recovery. "With the possibility of figures still being a little turbulent from month to month, nonetheless positivity in the manufacturing sector is mounting. Uncertainty over tax increases, government spending cuts and election results may slow recovery somewhat, although international trade could see the benefit of this uncertainty as the recent depreciation of the pound will likely bolster UK exports in the long term, despite yesterday's disappointing data. "Businesses looking to take advantage of export markets will see this aided by economic stabilisation across Europe. With a healthy focus from political parties on UK manufacturing, hopes will be for continued support of the sector which will help cement a more positive position moving forwards."