British industrial output fell less than expected in March though still posting its biggest annual decline on record, while the country's trade deficit narrowed to its smallest in almost 2 years, data showed today.
The Office for National Statistics said industrial output, which accounts for 18 per cent of the economy, dropped by 0.6 per cent in March, less than the 0.8 per cent drop forecast.
This was still enough to take the annual rate down 12.4 per cent, the biggest year-on-year drop since records began in 1968, but analysts saw positive signs in the data.
"This continues the theme of economic recovery," said George Buckley, UK economist at Deutsche Bank. "While output is still falling, it may not be long until we see a return to growth."
On a calendar quarter basis, industrial output fell 5.3 per cent in the first three months of this year, the steepest decline since 1974, though the ONS said this would not materially affect its already-published estimate of a 1.9 per cent drop in British GDP in the first quarter.
Manufacturing output also fell less than expected in March, down 0.1 per cent compared to economists' forecasts of a 0.8 per cent drop for an annual fall of 12.9 per cent.
"All in all, fairly positive data for the UK economy this morning," said Philip Shaw, chief economist with Investec.
"The industrial production figures are significantly better than expected and the February fall was revised sharply upwards ... It appears that the industrial side of the economy wasn't as weak through the first quarter."
Sterling rose to a session high against the dollar and the euro after the data. Britain's trade deficit shrank to its narrowest since April 2007, as imports fell faster than exports.
The March trade deficit was £6.589 billion, down from £6.834 billion in February.
Reuters