Hopes of balanced recovery boosted by increased factory output and higher exports in March

Hopes for a balanced economic recovery driven by factory production and exports have been boosted by data showing the fastest growth in manufacturing output for 15 years.

Official statistics showed that the sector expanded by 1.4pc in the first quarter of the year, the best since 1999, while the gap between imports and exports narrowed in March.

The increase in manufacturing output was well in excess of total economic growth of 0.8pc in the quarter, suggesting the economy is becoming more dependent on factory production. Friday’s data for manufacturing in March, which rounded up the quarter, showed a 0.5pc increase in manufacturing output on the previous month.

“The ‘march of the makers’ continues,” said Martin Beck, senior economic adviser to the EY ITEM Club. “And with April’s manufacturing PMI [survey] registering one of its best readings in the last three years, [the second quarter] seems set fair for further strong growth in the manufacturing sector.”

Separate figures indicated that Britain’s trade deficit improved in March, as foreign buyers purchased British-made jewellery and cars.

The deficit in trade of goods and services fell to £1.3bn in March, against £1.7bn in February and £2.5bn in March last year, although economists warned that the country still has a long way to go to improve the balance of imports and exports.

“While there are signs of a small improvement in the UK’s international trade performance over time, the pace of change is still painfully slow,” said David Kern, the British Chambers of Commerce’s chief economist. He said the trade deficit for the first three months of the year was only marginally narrower than that in 2013.

Exports of goods increased by 4.9pc between February and March, although imports also rose by 2.8pc. The deficit in goods narrowed to £8.5bn, while Britain’s surplus in services rose to £7.2bn.

While manufacturing improved, industrial production, which counts other areas such as water supply and mining, fell 0.1pc in March due to declining oil and gas extraction. Construction output fell for the second consecutive month, down 1pc on February.

Economists said the figures were unlikely to affect the official 0.8pc reading for economic growth in the first quarter of the year.

[Telegraph Finance]