Thursday, February 09, 2012
Better manufacturing, better trade
Posted by David Smith at 10:15 AM
Category: Thoughts and responses

As surveys had suggested, manufacturing got stronger as the fourth quarter went on. Today's official figures show a 1% jump in manufacturing output in December, enough to push annual growth back into positive territory (0.8%). Given that the surveys have pointed to even stronger growth in January, this is encouraging.

Overall industrial production also rose, by 0.5%, but not by enough to change fourth quarter GDP at this stage. Overall industrial production fell by 3.3% compared with a year earlier, dragged down by energy supply. This was a significantly depressing factor in fourth quarter GDP.

As the Office for National Statistics put it: "Gas supply output was the main downwards driver, falling by 14.0 per cent, with the comparatively mild weather in 2011 Q4 and reduced demand for gas in the generation of electricity factors in the fall." More here.

Alongside the industrial production numbers, there was a big drop in the monthly trade deficit, from 2.8 billion (goods and services) in November, to 1.1 billion in December, its lowest since April 2003. Exports rose marginally (in value terms), while imports fell by 3.4%.

The overall trade deficit fell from 36.7 billion in 2010 to 28 billion in 2011, though the trade in goods deficit increased from 98.5 billion to 99.3 billion. That was mainly due to a widening in the trade deficit in oil, up from 4.7 billion to 11.1 bilion. More here.