UK output recovers in July after oil rig dip

The figures, which were fully in line with expectations, confirm a picture of a strong rebound in manufacturing after heavy losses in the recession of 2008-09, with the strongest annual growth in more than 15 years.

“It's a decent reading,” said George Buckley, UK economist at Deutsche Bank. “But I think it's going to be quite difficult to achieve the same rates of growth (going forward) that we saw in the first and second quarters of this year.”

Manufacturing output rose 0.3 percent on the month, the same pace as the previous two months, lifting the annual rate to 4.9 percent — the highest since December 1994.

Industrial output also rose 0.3 percent on the month, recovering from a 0.5 percent drop in June, taking the annual rate to 1.9 percent from 1.3 percent. The statistics office said there was scope for further gains as more oil rigs came back on stream in August.

Oil and gas output rose 0.8 percent in July after a 5.2 percent decline in June but was still 8.4 percent lower than the same month a year ago.

Financial markets showed little reaction to the data.

Britain's economy grew a surprisingly strong 1.2 percent in the second quarter of this year, but recent surveys suggest that marked the high-water mark for growth in the manufacturing, services and construction sectors.

Already there is evidence that manufacturing growth has peaked. The three-month on three-month rate, which smoothes out monthly volatility, eased to 0.9 percent from 1.6 percent, its lowest rate since February.

Peter Dixon, an economist at Commerzbank, said Wednesday's figures taken together with last week's PMI surveys suggest third quarter growth of 0.3 to 0.5 percent in the economy as a whole.

Within the manufacturing sector the main rises were in the machinery and equipment, textiles, and paper, printing and publishing categories. The main faller was transport equipment, particularly the production of motor vehicles which has suffered since the ending of government incentive schemes.

Industry data last month showed car production fell by an annual 8.9 percent in July, the first decline since October.

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