March 10, 2011 / 9:34 AM / 9 years ago

Manufacturing output bounces back in January

A worker inspects the spinning machines winding cashmere fibres onto cones at a textiles company in Scotland May 20, 2008. REUTERS/Sarah Marsh

LONDON (Reuters) - Manufacturing output rebounded more than expected in January to rise at its fastest monthly pace in 10 months, after firms made up for a weather-related drop in output in December, official data showed on Thursday.

The Office for National Statistics said manufacturing output rose 1.0 percent in January, more than reversing a 0.1 percent fall in December, and the strongest rate of growth since March 2010. Analysts had expected an increase of 0.8 percent.

Output in the broader industrial sector also rose slightly more than expected, by 0.5 percent on the month, but was tempered by a 6.2 percent fall in utilities output, which reversed a cold-weather boost in December.

The figures indicate the economy is rebounding from a shock 0.6 percent contraction at the end of last year, but is unlikely to alter expectations that the Bank of England will leave interest rates at their record low 0.5 percent when the Monetary Policy Committee concludes its two-day rate-setting meeting at 12 p.m.

The ONS said 10 of the 13 manufacturing sub-sectors recorded growth on the month and one of the main drivers was an increase in non-metallic mineral products — building materials — which posted a 9.9 percent rise, rebounding from a sharp drop in December. Chemicals and man-made fibres and electrical and optical equipment also made strong contributions to monthly growth.

Thursday’s data suggest manufacturing remains on track to be one of the few bright spots in the economy, benefiting from a past fall in the pound and strengthening demand from other countries. Manufacturing PMI surveys so far this year have suggested activity has been growing at its fastest pace in at least 16 years.

The government and Bank of England are relying on strong export-driven growth in manufacturing in 2011 to fill the gap created by cuts in government spending and likely belt-tightening by consumers, which is putting pressure on the bigger services sector.

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