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Is British manufacturing turning the corner?

News that UK manufacturing production surged 2.3% in April has been welcomed by leading economists but they caution against complacency.

The latest data from the Office for National Statistics (ONS) shows that manufacturing output in April 2016 was up 2.3% on the month and up 0.8% on the year. Total industrial production in April 2016 was up 2% on the month, and up 1.6% on the year.

David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: 

"After a long run of disappointing results, April's stronger than expected figures should provide a much needed boost to confidence at a time when most economic figures published recently have been disappointing."

However, he warned against complacency. 

"Manufacturing output is still below its pre-recession level, and longer-term trends show that the sector is struggling. This is unsurprising given current adverse global economic conditions, but the latest figures show that there are still areas of strength in British manufacturing that must be supported. A healthy manufacturing base remains critical to the well-being of our economy in key areas such as exports, productivity and innovation."

Zach Witton, Deputy Chief Economist of manufacturers' organisation EEF said: 

"The size of the increase - the largest in more than three years - was a surprise and should be treated with caution because month-on-month data can be volatile. Yet it generally fits in with the picture from our latest Manufacturing Outlook survey that the worst may be behind the sector."

The timing of the surge also suggests that the EU referendum may not be such a significant factor when it comes to business confidence, according to Witton. 

He said: 

"There are no concrete signs that uncertainty associated with the upcoming referendum has had a major impact on manufacturing so far."

However, Chris Williamson, Chief Economist at Markit sounded a more pessimistic note. He said: 

"Even the ONS cautioned about reading too much into the buoyancy hinted at by the data. The monthly data are often volatile and April was no exception. The improvement in the official data also contrasts with survey evidence's deteriorating picture on the health of the economy, and manufacturing in particular, in recent months, suggesting the April upturn may be reversed in May."

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