By Max Clarke
The UK’s manufacturing output increased by a modest 2.8% over the past year ending May 2011, further delaying hopes in an imminent manufacturing recovery.
“Manufacturing output rose 1.8% in May, slightly more than most analysts expected,” commented David Kern, Chief Economist at the British Chambers of Commerce, before cautioning: “But this came after a sharp decline in April, and the wider industrial production figures were weaker than expected in May. On the basis of these figures, we reiterate our prediction that GDP in the second quarter of 2011 will see a modest increase of 0.3%. “
Gains were made in 10 out of the 13 manufacturing subsectors, with food drink and tobacco adding the highest upwards pressure. Carpenters fared less well, with wood and wood products dropping nearly 5%.
“While the recovery is modest,“ continued Kern, "the manufacturing output figures show there is no need for the government to abandon its current fiscal plans. However, the economic situation remains uncertain and everything must be done to ensure that there are no setbacks in the months ahead. The government must be more forceful in implementing growth-enhancing policies and in deregulating the labour market. On its part, the MPC must postpone interest rate increases at least until the final three months of the year. “
The unite Union reacted less positively to the news, again claiming April’s decline and May’s modest growth as vindication of their anti-cuts economic stance.
“In reality this is gloomy news for manufacturing. The UK needs a proper strategy for manufacturing with interventionist policies from the government rather than just hoping things will get better. There is no plan A or plan B for manufacturing,” said Unite’s Tony Burke.
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