UK manufacturing sees biggest monthly drop for two-and-a-half years in April

News Article - 17 June 2011
Category: Industry

The UK manufacturing industry experienced its biggest monthly drop for almost two-and-a-half years in April, with the royal wedding bank holiday and the Japanese tsunami disaster significantly affecting production.

Figures from the Office for National Statistics (ONS) revealed a fall of 1.5 per cent in manufacturing output between March and April.

Despite the decline in output, economists have questioned the significance of the data, suggesting the statistics are distorted as manufacturing output was in fact 1.3 per cent up on April last year.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "Manufacturers now appear to be finding life more challenging as stock rebuilding wanes and tighter fiscal policy weighs down on domestic demand. There are also signs that global demand is slowing as export orders fell back markedly in May.

"Meanwhile, high oil prices and other elevated input costs have been causing problems for manufacturers by substantially squeezing their margins and putting pressure on them to raise prices and risk losing business."

The ONS labelled April 2011 an "unusual" month, with the specially-created bank holiday for the royal wedding and the after-effects of the tsunami that wreaked havoc across northern Japan. Indeed many car manufacturers pin-pointed the fall-out of the Japanese tsunami as a legitimate reason for a lack of parts.

Peter Dixon, economist at Commerzbank, said: "There is weakness in the manufacturing sector, that's clear. But I think this figure overstates it and you wouldn't want to pin too many assumptions on one number.

"My guess is that part of this will be recouped in subsequent months. It's very much reminiscent of what happened in 2002 following the Golden Jubilee celebrations. We had some terrible numbers… but thereafter we got something of a rally."

April 2011 was officially the warmest April since records began and reduced manufacturing demand also led to electricity supply output falling 4.3 per cent from March, while gas supply output also fell 11.2 per cent in the month.

Article keywords: Manufacturing production, exports, Office for National Statistics, Howard Archer, IHS Global Insight, Peter Dixon, Commerzbank, Golden Jubilee

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