Manufacturing output rises

The Office of National Statistics (ONS) said factory production increased 0.3% over the month, after a 0.3% drop in December. This data will boost companies in the industry which have suffered a string of knock-backs in recent years. Weak economic conditions in Europe and the relative strength of the pound have made trading particularly difficult. Analysts said they were pleasantly surprised by the increase, which was helped on by an unexpected 24.1% rise in computer sector output. It meant that the annual growth figure was the least negative since March 2001. Taking out the distorting effect of computer production, ONS said overall output would actually have dropped by 0.5%. Seasonal factors also imply that the computer boost could have been reversed in February. But economists added that the rise had all the makings of a one-off, due to growing concerns of a war in Iraq. Adding to pressure on profit margins are soaring input costs, which far surpass increases in prices charged by producers for finished goods. "The underlying external picture is probably not as rosy as the data overall would imply and increasing signs of slowing domestic expenditure are spelling out a cogent case for lower interest rates," said Phillips Shaw at Investec. Deutsche Bank's George Buckley added: "Manufacturers are suffering at the hands of weak global demand and geopolitical uncertainties, and with the surveys continuing to indicate manufacturing contraction, we remain pessimistic on the outlook for this sector." The manufacturing figures come on top of a string of dreary data for the UK's economy. The British Retail Consortium says shop sales have dropped to their lowest level since September 1999. Meanwhile, in its latest estimate of UK output, the National Institute of Economic and Social Research said the economy grew by just 0.2% in the three months to February on the three months before. MF