British manufacturing output surged in April, denting fears that the UK economy is on pause ahead of the EU referendum.

Industrial production climbed by two per cent during the month alone to stand 1.6 per cent higher than April last year – jumping well ahead of expectations that the industry would suffer another modest decline.

Figures released by the Office for National Statistics (ONS) this morning showed manufacturing, the largest component of “production”, grew by 0.8 per cent over the month while output in the electricity and gas industry, as well as a very impressive month for pharmaceuticals also pushed the index higher.

A string of poor economic data, including the worst purchasing managers’ index (PMI) scores for three years had stoked concerns of an industry in terminal decline and an economy on hold until after 23 June.

Good news! UK Total production output is estimated to have increased by 1.6% in April 2016 compared with April 2015 #GBP #GDP — Shaun Richards (@notayesmansecon) June 8, 2016

Today’s figures, although only one month’s data, could prove otherwise.

The pharmaceutical industry, in particular, was a exceptionally bright spot on a report which surprised analysts and economists. Output from the manufacture of drugs rose 12.5 per cent – its largest monthly increase in four years.

EEF, the manufacturers' organisation said the data "backs up the feeling that there are no concrete signs that uncertainty associated with the upcoming referendum has had a major impact on manufacturing".



Zach Witton, deputy chief economist of the EEF told City A.M. the strong figures were the result of fortutitous timing of a number of different factors in the manufacturing industry. These included the "patent cliff" for pharmaceutical firms which was encouraging investment, a backlog of orders in the aerospace industry and stronger than expected growth in the Eurozone which could be supporting exports.

Jasper Lawler of CMC Markets said the markets responded well to the data: "The pound rose after data showed much stronger than expected UK industrial and manufacturing production in April. The much vaunted Brexit slowdown is looking more like a Brexceleration."

UK manufacturing output rises to highest level since October 2008: https://t.co/iKBBQneHMF — Andrew Sentance (@asentance) June 8, 2016

However, some economists warned not to get too carried away with the statistics.

"Despite the upbeat tone of the April’s UK industrial production figures, it is far too soon to proclaim that the sector is out of the woods, or shrugging off Brexit uncertainty. The figures are particularly volatile from month to month," said Paul Hollingsworth of Capital Economics.

Howard Archer at IHS Global said that while "the makers really did march … it is doubtful they can sustain the pace." He added, however, that even one month of strong figures could provide a significant boost to GDP growth in the second quarter, which some estimates predict could drop to as low as 0.2 per cent.