UK manufacturing output doubled expectations in December

LONDON (ShareCast) - Industrial production in the United Kingdom grew by 1.1% month-on-month in December, according to the latest data available from the Office for National Statistics (ONS).

The consensus estimate had been for a gain of 0.9%.

By sectors, and in terms of monthly rates of change, activity in mining&quarrying rose by 1.2% and in manufacturing by no less than 1.6%. The latter was twice what was expected by economists.

Energy supply was 0.9% lower and water&waste management 0.2% down.

Versus a year ago industrial output fell by 1.7%. Similarly, and in terms of quarterly rates of change, industrial production dropped by 1.9% in quarter four, the most since the first quarter of 2009 (mining and quarrying: -11%, manufacturing: -1.3%, energy&supply: 2.3% and water&waste management: 1.3%).

Within manufacturing, and also in terms of quarterly rates of change, the largest dropes were seen in food production dropped by -2.2%, that of basic metals&metal products another -2.7% and that of pharmaceuticals by -3.6%.

Manufacturing production now stands 1.5% below year ago levels.

All eyes will now turn to tomorrow's construction output data as economists try and gauge by how much the preliminary estimate of GDP contraction may be revised up by, if at all.

Commenting on the above data, Barclays Research had this to say: "The December data complete the picture on the performance of industrial production at the end of last year. Despite the stronger-than-expected rebound in December, the overall performance of industrial production during the fourth quarter was weak and we expect some of that weakness to continue in quarter one and for a measured recovery to emerge only from quarter two onwards.

"Furthermore, the ONS said that these data, on their own, are unlikely to lead to a revision of the fourth quarter GDP number (which showed GDP fell by 0.3% quarter-on-quarter) and, as such, they do no little to our view of the weakness in overall activity at the end of last year."

AB