U.K. industrial production recoded moderate growth in April, contradicting market expectations for stagnation, as strong performance by the mining sector more than offset a contraction in the manufacturing sector.
Data added to hopes that the gradual recovery that started in the first quarter is gaining momentum. Production rose for the third consecutive month, while factory output fell for the first time in three months.
Industrial production moved up 0.1 percent sequentially in April after gaining 0.7 percent in March, the Office for National Statistics said Tuesday. Economists had forecast neither growth nor decline.
"While April's industrial production figures were not as encouraging as recent news on other sectors of the economy, they still suggested that a modest industrial recovery is getting underway," Capital Economics U.K. Economist Samuel Tombs said.
The overall growth largely reflected a 0.9 percent gain in mining and quarrying production. Other mining and quarrying rose 1.7 percent from a month earlier, and oil and gas extraction moved up by 0.6 percent.
Further, output rose 1.5 percent in the water supply, sewerage and waste management sector.
The boost from mining was partially offset by falls of 0.2 percent each in the manufacturing sector and the electricity, gas steam and air conditioning sector.
Year-on-year, industrial production eased 0.6 percent in April, following the previous month's 1.4 percent fall. Manufacturing output dropped 0.5 percent annually.
During the three months ended April, production rose 0.8 percent from the preceding three-month period. Year-on-year, output decreased 1.5 percent in the April quarter.
"Admittedly, with the euro-zone showing few signs of escaping recession, there remain question marks about how long the industrial recovery can last," Tombs added.
In a sign that the British manufacturing sector is on the recovery path, the purchasing managers' survey for May showed that the activity index increased sharply to the highest level in fourteen months. According to the survey compiled by Markit Economics, a robust domestic market led to faster growth of output and new orders.
The Bank of England held off re-launching bond buying at this month's meeting, in the wake of the recovery gaining traction and positive economic developments. The size of quantitative easing was kept unchanged at GBP 375 billion and the key interest rate at a record low 0.50 percent.
The prospects for the British economy looks bright after it dodged a recession in the first quarter. The British Chambers of Commerce last month raised its growth forecast for the economy. The industry group now expects the gross domestic product to grow 0.9 percent this year and 1.9 percent next year.
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