By Claire West
Nida Ali, economic advisor to the Ernst & Young ITEM Club, comments on this weeks industrial production and manufacturing output figures:
“While we are cautious about reading too much into the monthly fall in industrial production, which tend to be quite volatile, the fact that growth in manufacturing output remained flat poses a genuine cause for concern. With ongoing weakness in the services sector, manufacturing has been leading the recovery so far and this trend was expected to continue over the coming year.
“But today's results, when coupled with a sharp slowdown in the manufacturing PMI for March, suggest that strength in the sector may be faltering. Indeed, February posted a fall in the majority of the sub-sectors that make up manufacturing. However, we would be wary of jumping to any conclusions from just one month's data and await subsequent releases to draw a firmer conclusion about the outlook.
“February's stagnation in manufacturing output implies that GDP growth in 2011Q1 may not be as strong as currently expected.”