There were further signs that the modest improvement seen in the monthly manufacturing survey from the Chartered Institute of Purchasing and Supply is finally translating into the official data. The office for National Statistics revealed that manufacturing output, which accounts for around 17 pct of overall economic activity, increased by a seasonally-adjusted 0.3 pct in December from the previous month, ahead of analysts' expectations of a more modest 0.1 pct increase.
December's increase was the second consecutive monthly increase, following November's upwardly-revised 0.5 pct increase from the original 0.4 pct gain. That was the first time since April-July that the sector posted two consecutive output gains. However, on a year-on-year basis, revisions to back data meant that output was more disappointing than anticipated. The statistics office said the year-on-year decline was 2.2 pct against expectations of a 1.8 pct fall.
For November, the decline was revised to 2.2 pct from the original 1.8 pct as a result of these methodological adjustments. The sector's difficulties over 2005 was illustrated in the annual data. Output in 2005 fell 0.8 pct from the previous year, the first annual decline since 2002's 3.1 pct fall.
In December, the statistics office said the only significant increase in output came from chemicals and man-made fibres, which witnessed a 1.5 pct output gain, while the only significant decrease in output was the 1.8 pct fall recorded in the electrical and optical equipment industries. Elsewhere, today's release showed that the wider measure of industrial production, which also includes energy and mineral extraction, also fared moderately well in December.
Industrial production, which accounts for just over 20 pct of GDP, rose a seasonally-adjusted 0.2 pct in December from the previous month, slightly lower than expectations of a 0.3 pct gain. That was the first time since May that the wider measure was in positive territory for two months running.
Like manufacturing, there were methodological adjustments to previous months' data. In November, industrial production was revised up to a 0.8 pct monthly gain against the original estimate of 0.6 pct.
On a year-on-year basis, industrial production was 2.6 pct lower against forecasts of a 2.3 pct decline. In November, the equivalent annual decline stood at 2.7 pct, deeper than the original estimate of 2.4 pct. Over 2005 as a whole, industrial production was 1.7 pct lower, the first fall since 2003.
As well as the 0.8 pct fall in manufacturing, the output of the electricity, gas and water supply industries fell by 1.1 pct, while mining and quarrying output was 8.7 pct lower
The 2005 decline will have knocked off around 0.4 pct from annual GDP, a spokesman for the statistics office said. The latest figures suggest that the UK economy only grew by around 1.8 pct in 2005, its lowest rate in more than a decade.
On a three month basis, the statistics office said industrial production was 0.8 pct lower than the previous three months while manufacturing output was down an equivalent 1.0 pct. In addition, the statistics office said both manufacturing output and industrial production in the latest three months were 0.2 pct lower than the same period a year ago.