Strength of manufacturing output growth surprises
A stronger than expected rise in manufacturing output during January has left many analysts betting against anything other than a gradual drop in UK interest rates this year.
The Office for National Statistics (ONS) said manufacturing production, which accounts for around 15% of Britain's economy, grew 0.4% at the start of the year. That's stronger than the 0.1% rise analysts had predicted and was the biggest increase since last October.
That takes the annual figure to 0.6%, far more than the flat read economists had expected.
Analysts pointed to an increase in output of 2% in the machinery and equipment industries and 1.4% in the chemicals and man-made fibres industries.
Today's report follows last week's stronger than expected manufacturing data from the Chartered Institute for Purchasing and Supply, whose monthly purchasing managers' index edged up to 51.3 in February from an upwardly revised 50.7 the month before.
That report also revealed that pricing pressures hit a record last month as raw material costs continued to soar, presenting central bank policymakers with a headache.
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Meanwhile, factory gate inflation remains at its highest in 16 years, with manufacturers' input prices leaping 1.7% between January and February, said the ONS Monday.
The input price index for materials and fuels purchased by the manufacturing industry rose 19.4% in the year to February, due mainly to the rise in crude prices.
Despite a weaker than expected 0.3% increase in non-seasonally adjusted output prices, the annual rate of factory gate inflation of 5.7% was still the highest since July 1991.
Meanwhile, industrial production fell 0.1% in January and by 0.4% on an annual basis, pretty much in line with expectations.
The numbers for the three months to January revealed no change for both manufacturing and industrial production.
