UK December output climbs more than expected

LONDON (Reuters) - British industrial output rose a touch more than expected in December, ending its worst quarter since the start of 2009 with a glimmer of hope for a government desperate to avoid sliding back into recession.

The broad indicator of output, which includes energy production and mining, grew 1.1 percent compared to a revised 0.2 percent rise in November and economists' forecasts for growth of 0.9 percent.

Within that, manufacturing output climbed 1.6 percent on the month in December after a fall of 0.3 percent in November, the Office for National Statistics said.

"The significant rebound in manufacturing output over December is welcome, which should help to dispel fears over a triple-dip recession," said Philip Shaw, economist with Investec in London.

The economy disappointed the market by shrinking in the fourth quarter and another contraction at the start of this year would mark its third dip into recession since the 2008 banking crisis.

Whether it does may be of more political than economic significance, and economists say the bigger concern is that growth shows little sign of a more robust recovery.

"The key point is manufacturing output is still 1.5 percent lower than it was a year ago," said Commerzbank analyst Peter Dixon.

"Hopefully we will get a little more strength in the course of 2013 as the euro zone crisis begins to normalise, but obviously it's going to be a slow haul for the manufacturing sector."

Oil field shutdowns drove the 1.9 percent slide on the quarter, which was the worst since the first quarter of 2009.

That was a slightly bigger decline than originally shown in the GDP figures, although the ONS said the latest number would have a negligible impact on its first GDP estimate.

Leading indicators have given some tentative signs of an economic recovery at the start of this year, and the Bank of England is not expected to take any further steps to support growth when it meets on Thursday.

Policymakers increasingly doubt the ability of more quantitative easing to lift demand and there have been signs that some of its moves to reduce lending costs for house buyers and firms were beginning to have an impact.

Separate ONS data released on Thursday showed that Britain's goods trade deficit narrowed in December as forecast.

The goods trade deficit shrank to 8.897 billion pounds from 9.275 billion pounds in November. Economists had forecast a gap of 8.93 billion pounds.

(Editing by Hugh Lawson)

Source: http://news.yahoo.com/uk-december-industrial-output-tops-forecast-weak-quarter-093328358--business.html

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