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UK factory activity dips in September

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by Kay Mitchell

The Chartered Institute of Purchasing & Supply (CIPS) index has revealed a fall in UK manufacturing activity in September by falling to 49.5 from 49.7 in August.

The data shows that employers reduced headcount for the 17th consecutive month, while the rate of pick-up in new orders slowed.

The fall was a surprise to many analysts who were expecting a rise to 50.3. Back in July, the index rose above the crucial 50 level but has since dipped below.

However, while a reading below the 50 mark represents a contraction in activity, the CIPS and Market (compiler of the survey) were optimistic about the figures.

Rob Dobson, senior economist at Markit, said: “The picture is one of consolidation not contraction.”

Mr Dobson added: “New orders are rising, sterling is supporting export sales as overseas markets improve and the key orders-inventory ratio remains at an elevated level.”

In other news this week, the Office for National Statistics (ONS) revealed that the UK economy contracted by 0.6% in the April to June period – rather than the 0.7% previously reported and the 0.8% reported prior to that.

According to the ONS, manufacturing output fell 0.1% in the second quarter, which was half the amount previously estimated, while the fall in construction output was 0.8%, revised from the original 2.2%.

The figures bring hope that the UK will exit recession in the third quarter by experiencing positive growth.

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News posted: October 1, 2009

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