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UK April industrial output rises at fastest annual pace since 2011

Published 10/06/2014, 09:47
Updated 10/06/2014, 10:20

LONDON (Reuters) - British industrial output rose at its fastest annual pace in more than three years in April, showing that the economic expansion was continuing to broaden out, official data showed on Tuesday.

Industrial output rose by 0.4 percent on the month, as expected in a Reuters poll, to leave it 3.0 percent higher than a year ago, its biggest rise since January 2011.

Output for manufacturing also increased by 0.4 percent in April, having previously grown at its fastest pace for a calendar quarter in nearly four years during the first three months of 2014.

That too was in line with a 0.4 percent in a Reuters poll of economists. Annual growth in manufacturing output of 4.4 percent was the strongest since February 2011.

Britain's robust economic recovery over the past year has been heavily reliant on consumer demand and housing-related sectors, but there are increasing signs that the drivers of growth are becoming more varied.

The Bank of England has said it wants to see stronger business investment and exports before it raises interest rates from their record-low 0.5 percent, something most economists think is just under a year away.

The Office for National Statistics said industrial output would have shown even greater growth had it not been for an unusually warm April, which was 2.7 degrees Celsius hotter than a year earlier.

The warmer weather contributed to a 11.5 percent decline in electricity and gas output in April, which knocked around 1 percentage point off the annual growth rate for industrial output.

Industrial output in the three months to April was 1.1 percent higher than the previous three month period, its biggest increase since June 2010.

Last week's Markit survey of factory purchasing managers suggested that economic rebalancing was underway, with growth continuing to be robust in May.

And on Monday the EEF manufacturers' trade body revised up its growth forecast for the sector this year to 3.6 percent from 2.7 percent expected three months ago - a faster expansion than for the economy as a whole, which it expects to grow by 3.0 percent.

However, manufacturing has further to go to catch up on the deep slump after the 2008 financial crisis. Factory output is still 7.0 percent below its peak, while services sector output is already well above its pre-crisis peak.

Recovery however has not yet translated into higher price pressures, allowing the Bank of England last week to once again keep interest rates on hold.

(Reporting by Ana Nicolaci da Costa and David Milliken)

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