ONS data reveals manufacturing upturn

UK manufacturing output rose a whole percentage point in December. The improvement in manufacturing slowed the rate of decline over the more reliable three months measure to December from 1.0% to 0.8%. There was more good news from fresh trade data, which showed the goods deficit falling to a 22-month low of £7.1bn in December. The new data added to signs that the worst may be over for the UK economy and that a double-dip recession will be avoided, said Markit chief economist Chris Williamson. He went on: "Like the production numbers, the official trade data are following the recent upturn in the business survey data which took so many by surprise, and we therefore expect to see increasing numbers of overly-gloomy analysts start revising up their growth forecasts for 2012 in the light of these better than anticipated numbers." At the manufacturers' organisations EEF, chief economist Lee Hopley hoped that the strong rebound in manufacturing output would provide a solid platform for continued recovery. "In line with a lot of positive reporting and anecdotal evidence we are continuing to see some strong sector performances, especially those with long lead times and exposure to emerging markets," she added. "The UK's trade data show that some sectors are continuing to benefit from strong export demand, particularly in non-EU markets." Mark Lee, head of manufacturing at Barclays Corporate described the upturn as "tentative", adding that capital investment remained frustratingly low among manufacturers and across the UK economy as a whole. "With consumer spending weak, cash rich companies need to start putting their hand in their pockets if we are to see this nascent industrial upturn gather pace," he said.