Industry shows signs of recovery

HOPES that the long-suffering manufacturing sector has turned the corner were boosted today by news that industry has enjoyed its best five-month run in more than four years.

Factory output rose a bigger-than-expected 0.2% in January, official data showed. That took the year-on-year rate of increase to 1.4%, the highest since last June.

January marked the fifth month running that manufacturing has avoided a fall, an achievement not seen since the second half of 2000. However, the broader measure of industrial production, which includes mining and energy output, fell 0.2%.

Howard Archer, economist at consultancy Global Insight, said: 'The rise in manufacturing output boosts hopes the sector has regained limited upward momentum. Nevertheless, the sector is still handicapped by high oil prices and the strength of sterling.'

Those difficulties were reflected in data showing Britain's trade gap widened from £4.9bn in December to £5.2bn in January as exports to non-European Union countries, including the US, dived.

Economists said today's news did nothing to change expectations that the Bank of England would leave interest rates at 4.75% tomorrow after its latest meeting.

Rob Carnell at ING Financial Markets said: 'This data certainly does not give the monetary policy committee the green light to raise rates in coming months, as some members have been threatening.'