British manufacturing output powers to 16-year high

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British manufacturers broke through the gloom in May, raising output by 4.3 percent over 12 months, the biggest rise for nearly 16 years as Britain recovers from a record recession, official data showed on Thursday.

On a monthly basis, output gained 0.3 percent in May from output in April, as electrical goods production rose sharply, the Office for National Statistics said in a statement.

Economists had expected manufacturing output to have increased in May by 0.3 percent on the month and by 4.4 percent on a 12-month comparison, Dow Jones Newswires said.

"Total manufacturing output rose by 4.3 percent in May 2010 compared to the same month a year ago. This is the strongest picture since December 1994," the ONS said.

"The largest contributors to the rise were the machinery and equipment industries, which rose by 13.7 percent and the basic metals and metal products industries, which increased by 9.0 percent.

"The largest decrease in output over the same period was 3.2 percent in the chemicals and man-made fibres industries," the ONS added.

The strong performance was skewed by a collapse in output one year ago when the British economy was mired in a record-length recession, which it subsequently escaped in late 2009.

The ONS added that its broader measure of industrial production, including mining and quarrying, and electricity, gas, and water supply, was 0.7-percent stronger in May from April, and was 2.6-percent stronger on the year. That was the biggest annual gain since June 2000.

Owen James, economist at the Centre for Economics and Business Research consultancy, said the latest data showed that industry was recovering well from the sharp downturn.

But he warned that looming government spending cuts could drain demand from the public sector.

"On the whole the data suggests that the UK's production industries are recovering quite smartly," said James.

"With the major government spending cuts drawing closer, it is unlikely that fast growth will be sustainable when demand from the public sector drops off."

The data was published ahead of an interest rate decision from the Bank of England. The British central bank is widely expected to keep its key lending rate on hold at a record low 0.50 percent amid the fragile economic recovery.

© 2010 AFP

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