Industrial production in the UK increased for the second straight month in March, and at a faster rate than expected, as the unusually chilly weather pushed up demand for electricity and gas.
Industrial production increased 0.7 percent sequentially in March, after growing 0.9 percent in the previous month, data released by the Office for National Statistics showed Thursday. Economists had forecast a much slower monthly growth of 0.2 percent. Production increased for the second month in a row.
"March's industrial production figures suggest that the economic recovery gained some momentum towards the end of the first quarter," Capital Economics UK Economist Samuel Tombs said.
However, with the Eurozone still deep in recession, any recovery in the export-dependent industrial sector this year is likely to be limp at best, the economist noted.
The overall industrial output growth was driven mainly by a 2.4 percent rise in the production of electricity, gas, steam and air conditioning as the coldest March since 1962 helped to boost demand.
The energy output growth rate was bigger than the previous month's 1.5 percent rise.
At the same time, manufacturing production rose at a faster rate of 1.1 percent than a 0.7 percent in February. Meanwhile, there was a 2 percent contraction in mining output, which fully offset February's 2 percent increase.
On a yearly basis, industrial production dropped 1.4 percent, compared to February's 2.5 percent fall. All sub-sectors, excluding electricity, gas steam and air conditioning, recorded declines from the prior year. The overall decrease in factory output was forecast to ease to 1.6 percent.
Manufacturing production dropped at a slower rate of 1.4 percent year-on-year than 1.6 percent a month earlier, while expectations were for a 2 fall.
During the three months ended March, industrial production advanced 0.2 percent from the preceding three-month period. Production of utilities rose 0.6 percent, while manufacturing fell by 0.3 percent.
The Bank of England at today's monetary policy meeting retained its key interest rate at a record low of 0.5 percent and maintained the size of quantitative easing at GBP375 billion, after recent economic data painted a rosy picture, signaling that the economy is on the revival path.
In a sign that recovery is gaining strength, the Society of Motor Manufacturers and Traders yesterday said new car sales in the UK rose 14.8 percent in April from a year ago, marking the strongest growth in more than five years.
The recent Purchasing Managers' data for April added to signs of improvement in private sector activity. The service sector expanded at the fastest pace in eight months on strong growth in new order wins. At the same time, declines in manufacturing and construction activity slowed from the prior month.
In the first quarter, the U.K. economy dodged recession, averting a triple-dip recession, largely due to an expansion in the dominant service sector. The economy expanded 0.3 percent in the first quarter, offsetting the 0.3 percent contraction in the previous quarter.
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