Industrial figures blow for hopes of recovery

Weak manufacturing data dealt a blow to Britain's recovery prospects yesterday, and lowered the chances of an upgrade to first-quarter GDP growth.

Industrial production, which includes sectors such as mining and energy supply, grew by just 0.3 per cent month-on-month in March, while manufacturing output edged ahead 0.2 per cent, the Office for National Statistics (ONS) said.

Economists were expecting growth figures of 0.8 per cent and 0.4 per cent respectively.

The lower-than-forecast expansion was driven by declines in the production of consumer durables, such as computers, white goods and phones, and capital goods, such as machinery, the ONS noted.

Statisticians said the negative impact on Q1 GDP figures - a recent initial reading suggested growth of 0.5 per cent - would be minimal. Nonetheless, yesterday's report indicates that manufacturing activity is slowing from its heady pace last year and highlights the sluggish pace of Britain's economic recovery.

The UK government and Bank of England are relying on strong export-driven growth in manufacturing to fill the gap created by austerity cuts and probable belt-tightening by consumers.

Howard Archer, chief UK economist at forecasting group IHS Global Insight, said: "The fact that manufacturing output only rose 0.2 per cent month-on-month in March after being flat in February raises concern that the sector could be coming off the boil."

David Kern, chief economist at the British Chambers of Commerce, said: "Although we have seen progress in manufacturing in the last year, the most recent figures have been disappointing, and the upturn in output must accelerate."