Page last updated at 05:54 GMT, Thursday, 11 June 2009 06:54 UK

UK output sees surprise increase

A salt mine in England
Is increased output a 'green shoot' of recovery?

UK industrial output rose unexpectedly in April - the first month-on-month climb since February 2008, official figures have shown.

Output rose by 0.3% from the previous month, the Office for National Statistics said. Analysts had been expecting output to fall by 0.1%.

Manufacturing rose 0.2% in April, which was also an unexpected increase.

Meanwhile, a respected research institute has forecast that the UK economy may be at a turning point.

Signs of recovery

The National Institute of Economic and Social Research (NIESR) has estimated that UK economy resumed growth in April and May after a sharp decline of 1.9% in the three months to March.

Martin Weale, director of NIESR, told the BBC that he "expects the official figures to show either that the recession is over or that it is close to over" in the second quarter of 2009.

He says he believes that March represented the "trough" of the recession and that growth was positive, or near zero, in both April and May.

The NEISR has a good record in forecasting monthly changes in GDP. The official figures, covering the period from April through June, will not be published until late July.

And a member of the Bank of England's Monetary Policy Committee, Andrew Sentance, also says he thinks there are signs of recovery.

"In recent months we have seen some promising signs that the recession - here in the UK and globally - may now be bottoming out," he told Scottish businessmen in Aberdeen.

He added that "we cannot yet predict the exact timing and strength of the recovery which will eventually emerge."

But other economists warned that it might be too early to say the UK economy was out of recession.

'Obstacles'

In addition to the better-than-expected industrial production figures for April, March's figure was also revised upwards to a 0.3% contraction from a 0.6% fall.

The manufacturing output figure for March was also revised upwards to 0.2% growth.

The manufacturing and industrial production figures "generally bode well" for an economic recovery, said Investec analyst, Philip Shaw, who added it was "quite feasible" that there would be a growth in GDP between March and June.

But he said there were still question marks over levels of demand for goods.

"The jury's still very much out on the strength or the shape of the medium-term recovery in the economy," he said.

Manufacturers had been helped by the weaker pound boosting competitiveness said Howard Archer of Global Insight.

But they still faced "serious obstacles" including battling against "muted domestic and export demand, intensified competition and ongoing tight credit conditions," he said.

Industrial production in April was 12.3% lower than in April 2008.

Separately, the ONS said the UK's goods and services trade deficit with the rest of the world had widened to its largest since September last year.

The total trade deficit was £3.014bn in April from £2.716bn in March.



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