Weak production growth due to poor weather - EY ITEM Club
11 March 2014
- Weak overall production growth in January due to poor weather
- But a strong start to 2014 for manufacturing
- Greater investment is supporting capital goods production
Andrew Goodwin senior economic adviser to the EY ITEM Club, comments on today’s Industrial Production figures:
“The weak rise in industrial production is largely due to temporary factors – the oil and gas sector was badly affected by poor weather conditions and contracted sharply, which dragged down the headline figure. If we stripped out the oil and gas sector, production would have risen by 0.5% on the month.
“It appears that robust domestic demand is finally being reflected in the production schedules of UK manufacturers. The rebound in investment seems to be playing a key role in boosting the production of capital goods. Yet the numbers tell a more subdued story than that of the PMI numbers, and manufacturing output is still 9% below its pre-crisis peak.
“Output should gain further traction as external demand picks up, which the survey data suggests has already started to happen. We expect to see manufacturing output grow by more than 3% in 2014.”