Industrial output back in positive territory

Strong growth in manufacturing has helped British industrial output return to positive territory despite weakness in mining and the oil and gas sector.

Manufacturing output rose by 0.6 per cent in November, according to the government's index of production, showing a 5.6 per cent increase since November 2009.

Overall industrial output rose 0.4 per cent in November after October's 0.1 per cent decline, a smaller rebound than many analysts had expected. Annual output growth slowed to 3.3 per cent, from 3.5 per cent in October.

Alan Hamilton, who heads the manufacturing sector team at Clydesdale and Yorkshire banks, predicted the growth would continue. He said: "Lending to the manufacturing sector has not relented and there is still demand for funding and financial support. Signs are pointing to an increase in M&A activity this year, which should have a positive impact on the sector.

"This, combined with the relative strength in the pound and the high demand for UK products, should hopefully see prolonged growth in the industry for months to come."

Howard Archer, chief UK economist at IHS Global Insight, said: "Not only was output decent in November, but December survey evidence from the purchasing managers, CBI, British Chambers of Commerce and the Employers' Engineering Federation has all been healthy. In particular, orders are currently elevated with foreign demand high, which bodes well for manufacturing output in the early months of 2011 at least."

Output in mining and quarrying decreased by 7.5 per cent year-on-year in November, while oil and gas extraction fell 8.8 per cent.

Over the same period, output from the energy supply industries rose 1.8 per cent.