Manufacturing Rise  
Figures from the Office for National Statistics (ONS) show that UK manufacturing output jumped by the largest amount in a year in May following a sharp drop in April due to the abnormally large number of public holidays that month.

The growth, a rise of 1.8 per cent, beat forecasts for a 1 per cent rise and was the strongest showing since March 2010. However, the wider measure of industrial production only rose by 0.9 per cent in May, which was smaller than expected. This was mainly due to a sharp drop in oil and gas production due to unplanned maintenance work.

Britain’s manufacturing sector has been seen as the cornerstone for growth in the economy, but it is difficult to measure the true situation, as some firms have been affected by supply problems stemming from the disruption caused by March's earthquake and tsunami in Japan.

The statistics office said the effects of the Japanese tsunami on UK manufacturing diminished in May. A number of car manufacturers indicated that sales were getting back towards normal levels.

Ross Walker, analyst at RBS, said, "The manufacturing production figures rebounded much more strongly than the market thought. That tells us more about the underlying state of demand and activity.”

"The broader industrial production numbers matter more arithmetically for GDP, but the BoE will pay more attention to the factory numbers," he added.

However, May's increase failed to offset April’s 1.7 per cent drop, leaving some analysts concerned about the bigger picture.

"Even a decent rebound in June would probably leave industrial production down quite sharply in Q2 as a whole compared to Q1 and therefore dragging on GDP growth," said Vicky Redwood at Capital Economics.

"The survey evidence has given a pretty consistent picture of an underlying slowdown in demand for UK manufacturers' products both at home and overseas. Accordingly, this slowdown in the industrial recovery looks like it might continue."

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