Britain’s factories kept their slow recovery in the run up to Christmas. But the rise in manufacturing output failed to offset falls in mining and energy, leaving industrial production down 0.2% in December, says The Guardian.
Analysts blamed fears over the eurozone’s return to health for keeping the UK’s productive sectors subdued, alongside a sharp fall in oil and gas production in the North Sea brought on by the collapse in oil prices.
Over the last seven months oil prices have fallen by more than 50%, handing manufacturing businesses a large cut in production costs, but devastating the oil industry and North Sea production.
As the UK became a net importer of energy more than 10 years ago, the net effect for the country appears to be positive.
According to the Office for National Statistics (ONS), the data were slightly better than its initial estimates, which forecast a modest month on month fall in manufacturing output.
At the same time, the nudge higher in December was unlikely to be large enough to make an impact on the quarterly GDP figures.
ONS figures for the final month of 2014 indicated that manufacturing grew by 0.1% between November and December, and by 2.4%, despite some ups and downs. The broader measure of total industrial production increased by 1.4%.
Rob Wood, chief UK economist at Berenberg bank, blamed extended maintenance of North Sea oil rigs, forcing their closure for longer periods, for much of the fall in industrial production, which was likely to bounce back this year.
He said: “December’s overall industrial production fall was driven by falls in volatile oil and utilities output. Extended maintenance in some North Sea fields, like Huntington, account for the 1.4% [month on month] fall in extraction output in December – as an aside, that fall in oil output in December tallies with last week’s trade figures showing the oil trade deficit worsening in December.”
Wood also blamed the unusually warm weather through the final three months of last year for households using less electricity and gas than normal.
