EEF unconcerned as April's Index of Production fell

The UK's Index of Production fell 1.2% year-on-year in April, but the EEF says it is a blip caused by temporary factors.

Overall production output in April 2011 was 1.2 per cent lower than in April 2010. Total production output decreased by 1.7 per cent between March and April.

However, total manufacturing output increased by 1.3 per cent in April 2011 compared to the same month a year ago. Output increased in seven of the 13 sub-sectors and fell in six sub-sectors.

The largest contributors to the increase were the food, drink and tobacco industries which increased by 5.9 per cent, the transport equipment industries which increased by 4.7 per cent and the electrical and optical equipment industries which increased by 4.4 per cent.

The largest negative contribution to overall output was a decrease of 4.5 per cent in the chemicals and manmade fibres industries.

Between March and April, manufacturing output decreased by 1.5 per cent. Output decreased in ten of the 13 sub-sectors and rose in three sub-sectors.

The largest contributions to the decrease were the transport equipment industries which decreased by 4.1 per cent, the machinery and equipment industries which decreased by 2.7 per cent and the basic metals and metal products industries which decreased by 2.0 per cent.

The largest positive contribution to overall output was an increase of 0.9 per cent in the food, drink and tobacco industries.

Feedback from companies has highlighted the extra bank holiday in April and the after effects of the Japanese tsunami as factors influencing the reduction in output this month.

Ms Lee Hopley, chief economist at EEF, the manufacturers' organisation, said: “We shouldn't call time on the recovery on the back of predictable and temporary factors that pulled activity lower in April. The manufacturing recovery remains on track as more recent surveys suggest that output and orders remain strong.

“Indeed, the short-term supply-side impacts of the Royal Wedding, bank holidays and the tsunami will have masked sustained demand from export markets and suggest a rebound in activity in the coming months.

“Cutting through the noise of these temporary factors, recruitment and investment are picking up, while recent positive announcements from a range of sectors highlight the underlying strength of UK manufacturing.”