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Tuesday, 11 June, 2002, 12:45 GMT 13:45 UK
Output boost for hi-tech sector
Container ship delivery
UK trade deficit narrowed in April
Manufacturing output in the UK rose in April, with signs of a recovery in the beleaguered hi-tech industry, official figures showed.

Output rose 0.8% in April on Tuesday - the biggest rise for nearly a year - following a 0.5% fall in March, the Office for National Statistics said

The most significant improvements were made by the computer sector, where output rose 3.1%, and semi-conductor industry, where output grew by 5.4%, following a difficult few months.

Trade figures

Separate figures from the ONS showed the UK's balance on trade in goods and services narrowed in April, down 0.4bn to a provisionally estimated 1.6bn deficit.

In the three months to April, the balance on trade in goods and services was 5.4bn in deficit compared to a 5.5bn deficit in the previous three months.

The ONS said: "The latest estimate of trend suggests that the UK trade deficit is narrowing."

Rate rise

John Butler, economist at HSBC, said the figures were the first official sign of recovery in manufacturing output.

And they could prompt an upward revision of data for the UK's overall economic output during the first three months of the year.

This in turn could reduce wariness in the Bank of England's monetary policy committee (MPC) over raising interest rates, for fear of damaging what has been seen as a stagnant economy.

The figures "have increased the likelihood of a rate rise at the July [MPC] meeting", Mr Butler said.

"We still believe the MPC will take that opportunity, barring any particularly weak retail sales numbers."

Sign of recovery

Meanwhile, a leading economic think tank has already revised upwards its estimate of UK economic growth.

The National Institute for Social and Economic Research (NIESR), which produces estimates for UK GDP on a monthly basis, says that it now believes that UK economy grew by 0.4% in the three months to April, and by 0.6% in the three months to May.

It is a sharp turnaround from the recent situation of the UK economy, which has registered zero growth for the six months between October and March.

And it will be welcome news for the Chancellor, who had estimated that the UK economy would grow by between 2.0% and 2.5% this year.

Martin Weale, Director of NIESR, says that the data provide "the first solid evidence that the economy is recovering from its two quarters of stagnation," and expects rate rises in July or August.

See also:

08 May 02 | Business
07 May 02 | Business
21 Mar 02 | Business
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