Page last updated at 10:31 GMT, Wednesday, 10 March 2010

UK industrial output falls 0.4% in January

Vauxhall cars
The figures add to concerns about the stability of the UK's economic recovery

Industrial production in the UK fell unexpectedly in January, as the cold weather dented firms' output, official data has shown.

Output fell by 0.4% compared with December, the Office for National Statistics (ONS) said. Analysts had expected a rise of 0.3%.

Strong December figures and the icy weather were to blame for the biggest monthly drop since August.

Manufacturing output, fell 0.9%, adding to fears for the recovery.

However, year-on-year, manufacturing output recorded its first rise since March 2008, up 0.2%.

While most manufacturing industries saw declines, there were small rises in output from the machinery and equipment and food, drink and tobacco industries.

The ONS said that as well as the harsh weather being a factor, some firms had reported they had rushed to complete orders in December before January's rise in value added tax.

It added that industrial output in the three months to January climbed 1% compared with the previous three months. Many argue this gives a truer picture of economic conditions.

This figure represents the largest growth for the sector since March 2006.

'Rogue number'

The manufacturing group, the EEF, said that the output figures were "surprising given the raft of other survey data since the beginning of the year which has been more upbeat".

"The underlying trend is one of growth and the continued recovery in the world economy should underpin this in the months to come," said the EEF's chief economist, Lee Hopley.

Meanwhile Investec economist Philip Shaw said that while it was " impossible to blame everything on the weather", it did seem to be having an effect.

"The only comforting feature with manufacturing is that all the surveys show the output trend to be positive, which gives us confidence that January's official reading is a bit of a rogue number," he said.

Figures released on Tuesday showed that the UK's trade gap with the rest of the world had widened unexpectedly in January to its largest since August 2008.

Exports saw their sharpest drop in more than three years, and the UK's trade gap in goods and services widened to £3.8bn, compared with £2.6bn in December.



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