|A strong rebound in manufacturing in February appeared to have killed off fears of a triple dip recession, but the country’s weakening trade position took the gloss of an otherwise improving economic outlook.
Manufacturing output rose by 0.8pc, double economists’ forecasts, following January’s disastrous, weather-affected 1.5pc collapse.
The broader measure of industrial production also bounced back by 1pc, reversing much of January’s 1.2pc decline, according to the Office for National Statistics (ONS).
“With the UK’s largest oil and gas field coming back on-stream in March, likely leading to another positive gain in output, we are more optimistic that the UK can avoid its third technical recession in five years,” James Knightley, an economist at ING, said.
The sharp improvement in manufacturing, which accounts for 7pc of the UK economy, was offset by another poor performance by Britain’s exporters. The ONS said the trade deficit soared to £3.6bn in February, from £2.5bn the previous month. Economists had expected an increase to £3bn.
More worrying was a 4.7pc fall in exports of goods to non-EU countries, the very markets Britain’s manufacturers are targeting for growth. The £600m fall in exports to £11.8bn was largely accounted for by a £329m drop in exports to the US, though.
Overall, the trade deficit for goods soared from £8.2bn in January to £9.4bn – far worse than economists forecasts of £8.8bn. The trade surplus on services, which has been affected by declining demand for UK banking exports, was unchanged at £5.8bn.
“The volume of total UK exports fell again in February 2013 from January, so that export volumes have fallen by 7.5pc since the start of the year,” the ONS said.
The trade data will come as a disappointment for the Chancellor, who has been hoping for a rebound in UK exports as part of his strategy of rebalancing the economy from consumer spending to overseas demand. However, the recovery in the manufacturing data following the snow-affected January will have been welcomed.
Despite the trade figures, the pound rose. Sterling climbed 0.4pc against the dollar to $1.5311 by mid-morning. It was little changed against the euro.