U.K. Manufacturing December Gain Caps Best Year Since 2010

by Scott Hamilton

The data also showed that industrial production increased 0.1 percent in the fourth quarter. Photographer: Chris Ratcliffe/Bloomberg

(Bloomberg) -- U.K. manufacturing output unexpectedly rose in December, capping its best annual performance since 2010.
Factory production increased 0.1 percent after a 0.8 percent surge in November, the Office for National Statistics said in London Tuesday. Economists in a Bloomberg News survey had forecast a 0.1 percent decline. For the full year, manufacturing climbed 2.7 percent.
“The fall in oil prices looks set to provide some timely stimulus to the sector’s recovery soon,” Paul Hollingsworth, an economist at Capital Economics, said in a research note. “Nonetheless, given the strength of the pound and the weakness of demand in the euro zone, we expect any pickup in the pace of the manufacturing recovery to be fairly modest.”

The pound was trading at $1.5207 as of 10:05 a.m. London time, down 0.1 percent from yesterday.
Total industrial output fell 0.2 percent in December on the
month as extended maintenance on the Huntington North Sea oilfield helped drag oil and gas extraction down 3.1 percent. The statistics office said there was little evidence to suggest production volumes had been affected so far by plunging oil prices. There may be an impact in early 2015, according to the Department of Energy and Climate Change.

New Forecasts

The data also showed that industrial production increased 0.1 percent in the fourth quarter. While that’s better than the 0.1 percent decline initially estimated, the ONS said the impact on fourth-quarter gross domestic product would be “minimal.”
In 2014, production gained 1.4 percent, its first full-year advance since 2010.
The Bank of England will publish new economic forecasts on Thursday after holding its key interest rate at a record-low 0.5 percent last week. Policy makers are maintaining stimulus amid low inflation and weak demand in the euro area, Britain’s largest trading partner.
A Markit Economics report last week showed factory growth accelerated in January as producers saw a pickup in domestic orders and the biggest decline in raw-material costs in almost six years.