U.K. industrial production recovered at a faster-than-expected pace in February, reducing prospects of a triple-dip recession in the first quarter, but the modest improvement in the sluggish economy was countered by a widening trade deficit during the same month.
Industrial output grew 1 percent in February from a month ago, when it was down 1.3 percent, the Office for National Statistics said Tuesday. The rate of growth exceeded a 0.4 percent rise forecast by economists.
Likewise, manufacturing output advanced 0.8 percent month-on-month, partially offsetting the 1.9 percent decrease in January. It was forecast to grow 0.4 percent.
With the U.K.'s largest oil and gas field coming back on-stream in March, likely leading to another positive gain in output, James Knightley, ING Bank NV's economist said he is more optimistic that the economy can avoid its third technical recession in five years.
All sectors of industry improved in February, which last happened in July 2012. Despite the increase in production, the index has still reached the same level as in September 2012, the ONS said.
Mining and quarrying output gained 2.8 percent, energy output was up 1.3 percent and waste management sector output rose 0.8 percent.
A separate release from the ONS showed that the visible trade deficit increased more-than-expected in February due to a fall in exports amid rising domestic demand.
The trade gap totaled GBP 9.4 billion in February compared to GBP 8.2 billion January. This was expected to increase marginally to GBP 8.6 billion.
The sharply wider trade deficit for February highlights the fact that a return to growth in the first quarter still cannot be safely assumed, noted Howard Archer, chief UK economist at IHS Global Insight.
On a yearly basis, both industrial and manufacturing output continued its negative trend in February, but with a slow down in the rate of decline.
Industrial production slipped 2.2 percent, slower than the expected fall of 2.8 percent and followed January's 3.1 percent drop. Similarly, manufacturing output was down 1.4 percent, smaller than the 3.3 percent drop seen in January.
The latest Purchasing Managers' survey results reveal that the economy is reeling under a severe downturn. The manufacturing sector contracted again on lackluster demand from domestic and foreign markets.
The trade data today showed that the balance of trade in services was in a surplus of GBP 5.8 billion, slightly higher than GBP 5.7 billion a month earlier. As a result, the overall total trade balance showed a shortfall of GBP 3.6 billion, higher than GBP 2.5 billion in January.
The value of British exports to the rest of the world fell 1.1 percent between January and February. However, the value of imports increased 1.7 percent over the same period. The largest fall in exports was in goods shipments to non-EU countries, the statistical office said.
Citing weakness across export destination of the nation, the government reduced its growth forecast for this year to 0.6 percent from 1.2 percent. The Paris-based Organization for Economic Co-operation and Development expects the British economy to grow by 0.5 percent during the first quarter and 1.4 percent in the second.
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April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.