By Marcus Leach

Figures released by the Office for National Statistics (ONS) on Thursday showed that UK manufacturing output has recovered from December’s weather-related fall.

The stats revealed a 1% rise in manufacturing output for the month of January, in comparison to December, and in relation to the same figures from last year the output was up by 6.8%.

This rise represents the highest annual rise in almost twenty years.

“It is encouraging to see stronger figures than were expected,” David Kern, Chief Economist at the British Chambers of Commerce (BCC) said. “Although comparisons are slightly distorted by the severe weather in December, the underlying trends are undoubtedly positive.

“The manufacturing recovery is gathering momentum, and this data supports our belief that economic growth is positive in the current quarter, after the setback at the end of last year. In conjunction with positive trade figures, it looks hopeful that the rebalancing of the UK economy is set to continue.

“But we should remain cautious, as the strength in manufacturing comes after a long period of weakness. Although rising strongly over the past year, output is still more than seven per cent below its level in 2006. The sector faces many challenges in the months ahead, such as trying to cope with the Government’s austerity measures and the prospect of an interest rate increase in the next few months.

“The UK’s economic background will remain uncertain for some time, which is why the recovery in manufacturing must be supported. It is important that businesses can retain valuable skills, and UK exporters are able to compete on equitable terms. Regulatory burdens facing businesses, particularly small-and medium- sized firms, must be removed. We await the Chancellor’s forthcoming Budget in the hope that these growth supporting policies are addressed.”

Graeme Allinson, Head of Manufacturing, Barclays Corporate commented:

“This outstanding set of figures points to a manufacturing recovery that is both strong and sustainable. The number of businesses that fail during an economic recovery is often higher than in the recession preceding it, but the manufacturing companies we bank continue to outperform businesses generally, with little need for restructuring and very few insolvencies.

“It remains somewhat disappointing that we are still seeing little in the way of major capex or M&A activity amongst Britain’s manufacturing sector this year. While a few manufacturers are investing some of the cash they have accumulated over the past 18 months, there is still very little in the way of international acquisitions, new plant openings or private equity activity that we would expect to follow the wave of positive sentiment seen in the industry over the past year.”