BRITISH INDUSTRIAL output rose for the first time in more than a year in April after a jump in oil and pharmaceuticals production, raising the prospect that the economy could be out of recession.

But policymakers have urged caution on getting carried away with expectations of a strong recovery, especially because banks remain reluctant to lend – Bank of England policymaker Kate Barker said interest rates would remain low for some time.

The UK Office for National Statistics (ONS) said industrial output, which contributes 18 per cent to gross domestic product (GDP), rose 0.3 per cent on the month – the first increase since February 2008 and better than the 0.1 per cent decline economists had expected.

“The . . . figures generally bode well for a recovery in the economy and it’s quite feasible that GDP will have posted a gain over the second quarter,” said Philip Shaw, economist at Investec.

Services purchasing managers’ index (PMI) data covering about 38 per cent of GDP pointed to a return to growth for the sector in May, and Britain will be the first major industrialised nation to emerge from recession if there is overall GDP growth between April and June. The UK National Institute of Economic and Social Research estimated after the data that Britain’s economy returned to growth in April, expanding by roughly 0.2 per cent over the month and another 0.1 per cent in May. But there are doubts about the sustainability of any recovery.

Ms Barker, in an interview published earlier yesterday, said a rise in manufacturing orders could reflect temporary restocking by firms. “Manufacturing orders are starting to come back, but whether that’s a stocking issue or a turn-up in final demand isn’t so clear,” she told the Leicester Mercury newspaper.

The Bank of England cut interest rates to a record low of 0.5 per cent in March and just this week announced plans to broaden its £125 billion (€145.6 billion) quantitative easing programme to help firms find working capital.

The rise in industrial output was driven by a 2.5 per cent monthly increase in oil and gas extraction after a 2.7 per cent drop in March, as well as production of cars, up 8.5 per cent, and of pharmaceuticals, up 5.5 per cent.

March industrial output was revised up to a 0.3 per cent contraction from 0.6 per cent, though the ONS said this was not enough to boost first-quarter GDP, which shrank by 1.9 per cent.