UK March industrial output stronger than forecast

Industrial output climbed 0.7% in March after a downwardly revised increase of 0.9% in February

UK's industrial output rose more than expected in March as manufacturing gathered momentum, outweighing a fall in oil and gas production, official data showed on Thursday.

Industrial output climbed 0.7 per cent on the month in March after a downwardly revised increase of 0.9 per cent in February, well above forecasts of a 0.2 per cent rise, the Office for National Statistics said.

This left industrial output in the three months to March 0.2 per cent higher compared with the previous quarter, exactly in line with what the ONS had estimated as part of its first-quarter gross domestic product calculations.

On an annual basis, industrial output was down 1.4 per cent. That was the smallest drop since last August and better than forecasts for a 1.6 per cent decline, as unusually cold weather boosted electricity generation. UK's economy grew a stronger than expected 0.3 per cent in the first three months of 2013, helping the country dodge recession.

A marked fall in industrial output - largely due to a big drop in oil and gas production because of maintenance - was the biggest factor behind a 0.3 per cent fall in GDP in the last three months of 2012.

In the first three months of 2013, oil and gas output recovered some of the lost ground, with Thursday's data showing output up 2.1 per cent over the period compared with the final quarter of 2012.

However, in March alone the sub-sector posted a drop.

Industry overall - which makes up just 16 per cent of Britain's economy - made a negligible total contribution to first-quarter economic growth, which was largely driven by higher services output.

But Thursday's figures showed that manufacturing - which some economists think is a better gauge of the underlying health of the broader industrial sector - grew by 1.1 per cent from February, beating forecasts for a 0.3 per cent rise.

The increase was driven by the production of metals, electronics and machinery.

The latest industrial data is likely to confirm widespread expectations of no extra stimulus from the Bank of England when it announces its monthly policy decision at 12:00 pm.

Moreover, the outlook for manufacturing appears to be brightening further, as a survey of purchasing managers found that the sector almost returned to growth in April, easily surpassing forecasts.