Fears of triple-dip fade as manufacturing gears up

By PETER RANSCOMBE
Published on 08/02/2013 00:00

OUTPUT from Britain’s manufacturing sector grew at twice the rate economists had expected in December, raising hopes that the UK may avoid a triple-dip recession in the spring.

Figures from the Office for National Statistics (ONS) yesterday showed manufacturing output rose by 1.6 per cent month-on-month, following a 0.3 per cent drop in November.

Philip Shaw, an economist at Investec, said: “The significant rebound in manufacturing output over December is welcome, which should help to dispel fears over a triple-dip recession.”

But Commerzbank analyst Peter Dixon warned: “The key point is manufacturing output is still 1.5 per cent lower than it was a year ago so, although it was a good month in December, the trend clearly has not been very friendly over the past 12 months.

“Hopefully we will get more strength in 2013 as the eurozone crisis begins to normalise, but it’s going to be a slow haul for the manufacturing sector.”

The broader measure of industrial output – which takes into account energy production and mining – climbed by 1.1 per cent in December, compared to just 0.2 growth in November.

But maintenance work on oil rigs meant industrial output had dropped by 1.9 per cent quarter-on-quarter in the closing months of 2012, its worst performance since the start of 2009.

Separate data from ONS showed Britain’s trade deficit reached £37.7 billion for the whole of 2012, its highest level for more than a decade.

Katie Evans, an economist at the Centre for Economics & Business Research noted: “As recession in the eurozone drags on, the UK’s expansion into emerging markets is a positive sign.

“The growth in the size of the deficit over the years, however, proves that the UK must do more to balance its books.”