UK industrial production bounces back, ONS data shows

UK industrial performance improved in January but not as much as expected, with freshly released data from the Office for National statistics painting a mixed picture on Wednesday.

UK industrial production rose 0.3% in January on the previous month, up from the sizeable 1.1% decline in December but short of consensus forecasts of 0.4%.

But year-on-year, industrial production of 0.20% was better than predictions for a flat performance and flat on the December's figure.

Following three consecutive monthly falls, ONS data on UK manufacturing production showed a 0.7% month-on-month bounce, well ahead of the 0.20% forecast and a big improvement on the revised previous month's 0.30% decline.

Year-on-year, manufacturing production was down 0.10%, beating the estimate of a fall of 0.70% and much improved from the previous month's 1.70% slide.

There was another large fall in mining and quarrying activity, with a 5% decrease likely to reflect falls in North Sea production.

"After experiencing the largest monthly fall in three years in December, UK industrial production started 2016 on a slightly better footing," observed Scott Bowman at Capital Economics.

He said the manufacturing bounce-back potentially set the scene for a slightly better 2016 after contracting over 2015 as a whole.

"While 2016 started slightly better, near term prospects don’t look great with the manufacturing sector dealing with subdued global growth and North Sea production hit by low oil prices. That said, the more recent depreciation of trade-weighted sterling and our expectations of a pick-up in world growth in 2016 should slightly improve the manufacturing sector’s fortunes as this year progresses," Bowman added.