Factory figures hit recovery optimism

Official figures revealed output dropped 0.4 per cent in April, offsetting gains a month earlier when production jumped 2.2 per cent in the best showing for eight years.

Economists said the latest figures from the Office for National Statistics (ONS) were not cause for alarm as manufacturing output was still up 2.5 per cent on a quarter-on-quarter basis.

Hetal Mehta, senior economic adviser to the Ernst & Young ITEM Club, said monthly data was often volatile, adding that the sector was being supported by a turn in the stock cycle as customers rebuilt inventories.

"In addition, with the pound remaining weak and therefore continuing to boost UK competitiveness, we expect a healthy recovery in manufacturing as the sector ramps up production to meet export orders," she said.

The wider measure of industrial production, which includes mining and quarrying and electricity, gas and water supply, also fell by 0.4 per cent in April, although the figure was 2.1 per cent higher, quarter-on-quarter.

The recent strength in the industrial sector has helped put the UK's economic recovery on a firmer footing, with GDP figures for the first quarter upgraded to 0.3 per cent on the back of March's production growth.

In separate figures, the ONS said factory gate prices rose by 0.3 per cent as manufacturers protected margins against increasing input costs.