News : OECD see UK recovery
The OECD has confirmed that the UK had hit a “turning point” as official data showed that manufacturing output bounced back in March – rising by a stronger-than-expected 0.9%, according to the Office for National Statistics (ONS).
The OECD’s outlook for the UK suggested the country will rebound from recession in the second half of the year, although growth will remain subdued. The findings were made in its composite leading indicators (CLIs), which have a strong track record of predicting economic developments about six months in advance.
It said: “The CLI for the UK and major emerging economies, in particular China, are showing stronger positive signals compared to last month’s assessment.”
The UK CLIs have now grown for three months running, having previously declined for eight consecutive months. However, they still indicate that annual growth will be slower than the trend rate of about 2.3% and that the economy is weaker than a year ago.
Howard Archer, UK economist at IHS Global Insight, said: “The third successive modest improvement supports belief that the UK is seeing moderate growth.”
Signs of life in the UK were also evident in the ONS’s industrial production data. Manufacturing activity rose by 0.9% in March after falling 1.1% in February, which was a major factor behind the UK’s first double dip recession since 1975. The chemicals, transport equipment, computer and electronics industries were behind the recovery.
The wider measure of industrial production was less encouraging. A drop in oil and gas production caused it to fall by 0.3%. Economists pointed out, though, that the volatile oil and gas data can distort the real picture.
Andrew Johnson, senior economist at the EEF, the manufacturers’ organisation, said: “The figures paint a slightly improved picture for manufacturing and bring the official data closer to a range of business surveys. This suggests manufacturing is in a better position at the start of this year than it was at the end of 2011.”
The OECD data also pointed to an improving global picture, with global OECD region having “regained momentum” as well as the world’s leading and major emerging economies. The recovery is being driven by the US, Japan and China.
The eurozone remains the global Achilles heel. “In the euro area, the CLIs for France and Italy continue to point to sluggish economic activity below long term trend. The CLIs for Germany and most other euro area economies show slightly more positive signals,” the OECD said.