UK Industrial Production shows industry is lagging well behind services sector

10th June 2014

UK Industrial Production – 10/06/14

UK Industrial Production showed that the manufacturing recovery is maintaining pace, as the 0.4% rise in overall industry was driven by factory output. This was the fifth consecutive monthly increase for the manufacturing sector with transport equipment, computers and electronics leading the way.

The breakdown of industrial production showed that durable investment goods were the biggest in production. Considering the sharp fall in exports in the month of April, these investment goods were likely for the domestic market, suggesting the UK’s new investment drive has continued into the second quarter. This will ally fears that the recovery is primarily based on debt-fuelled consumer spending and shows that beneath the central bank stimulus, some economic rebalancing is underway.

UK Industrial Production posted its biggest yearly gain since 2011, but the reality is the output level is still 12% below its pre-2008 peak. This is a reminder that although the UK recovery is underway, it’s still in its infancy. Industry is lagging well behind the buoyant services sector and has a long way to back to pre-crisis levels.