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Production still on the up despite interest rate rises; MANUFACTURING.

Byline: By John Revill Manufacturing Editor

Manufacturing output rose more than expected in April, taking the annual rate of expansion to its highest in three months.

The Office for National Statistics said manufacturing production rose 0.3 per cent on the month in April after a 0.6 per cent rise in March. Analysts had predicted a 0.2 per cent gain.

April's monthly rise took the annual rate to 1.3 per cent from 0.7 per cent in March, the strongest since January.

There was widespread increases across the whole of manufacturing, with the largest rise coming in transport equipment industries.

There were no significant decreases, the ONS said.

Ian Smith, chief executive of manufacturing pressure group EEF West Midlands, said: "These figures demonstrate how far manufacturing performance has improved - maintaining sustained healthy growth figures at home and abroad.

"It is encouraging that manufacturing continues to grow despite the strength of the pound and uncertainty over interest rates.

"The outlook remains positive for the West Midlands with evidence from our recent business trends surveys continuing to paint a much stronger picture than the official data."

Investec economist Philip Shaw said: "These figures are a little firmer than the market consensus and indicate second-quarter growth got off to a good start.

"Manufacturing growth, however, still appears to be below what various surveys are implying."

Factory output in the three months to April was 0.4 per cent lower than in the previous three months, but was 0.8 per cent higher than a year ago. The ONS predicted it would look in better shape next month, when weak February figures fall out of the comparison.

It said the three-month decline was mainly the result of weaker aircraft production, but this was coming off high levels.

Overall industrial output also rose slightly more than expected, by 0.3 per cent instead of the 0.2 per cent predicted by analysts.

This left output 0.4 per cent higher on the year, also the strongest in three months. Output in March was 0.4 per cent lower on the year.

The figures did little to alter expectations that the Bank of England will raise base rate in the next few months, after pegging it at 5.5 per cent this week.

Meanwhile gas and water supply industries decreased by 0.7 per cent over the last three months, as mining and quarrying output increased by 1.9 per cent in the previous three months.

Within manufacturing, the output of consumer durable goods industries fell by 2.2 per cent compared with the previous three months, and was 1.3 per cent lower than in the same period a year ago.

Output in the consumer non durable goods dipped by 0.9 per cent in the latest three months, and was 0.9 per cent down on the same period a year ago.

Electricity, gas and water output fell 0.9 percent in April, the biggest decline since October.

This was primarily the result of a fall in gas production as temperatures soared in April.

Howard Archer, analyst at Global Insight, said: "Manufacturing output achieved solid growth in April, while the latest survey evidence is largely upbeat, indicating that the sector is currently performing pretty well despite the strong pound and higher interest rates. The Bank of England will be watching closely to see if manufacturers try to take advantage of this healthy activity by trying to push through more price hikes."
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Jun 9, 2007
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