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 Office of National Statistics (ONS) data now shows. Industrial output rose by 0.4 per cent on the month, to leave it 3.0 per cent higher than a year ago; its biggest rise since January 2011. Output for manufacturing also increased by 0.4 per cent in April, having previously grown at its fastest pace for a calendar quarter in nearly four years, during the first three months of 2014.
Annual growth in manufacturing output of 4.4 per cent 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 per cent, 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 is believed to have contributed to a 11.5 per cent 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 per cent higher than the previous three month period, its biggest increase since June 2010. The recent Markit survey of factory purchasing managers suggested that economic rebalancing was underway, with growth continuing to be robust in May.
The EEF manufacturers’ trade body has now revised up its growth forecast for the sector this year to 3.6 per cent from the 2.7 per cent expected three months ago – a faster expansion than for the economy as a whole, which it expects to grow by 3.0 per cent. However, manufacturing has further to go to catch up on the deep slump after the 2008 financial crisis. Factory output is still 7.0 per cent below its peak, while services sector output is already well above its pre-crisis peak.
