UK manufacturers give strength to Bank of England's stance on interest rates

THE Bank of England’s new-found hawkishness on interest rates was borne out today by the UK’s manufacturers, enjoying their best run for 30 years.

Threadneedle Street indicated this week that rates may have to rise higher and faster than first thought, as UK growth improves on the back of a roaring global economy. Manufacturing output rose 0.3% in December as the sector grew for the eighth month in a row — the best run since the Eighties though overall industrial production was hit by the closure of a key pipeline.

Builders — in the doldrums for much of last year — saw output jump 1.6% over the same month, although trade was affected by the recent oil price spike. As the UK is a net oil importer, that pushed the trade deficit up by £1.2 billion to £4.9 billion.

Pantheon’s chief UK economist Samuel Tombs warned more recent signs from manufacturers “suggest the industrial recovery is starting to lose some momentum”.