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Wednesday 04th of November 2009
November 2, 2009    

UK manufacturing activity beats expectations

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by Kay Murchie

The Chartered Institute of Purchasing & Supply (CIPS)/Markit purchasing managers index of manufacturing activity grew to 53.7 in October, up from the revised reading of 49.9 the previous month.

The reading beat forecasts of a rise to 50.0 and represented the fastest pace of growth in two years.

Furthermore, new orders rose at their fastest in almost six years with the index surging by 6.8 points on the month to 59.5 - the highest reading since January 2004, when it was 61.5.

According to the CIPS, today’s figures indicate that the economy has made a strong start to the final quarter of this year and according to David Noble of the Institute, manufacturing appears to have “turned a corner”.

However, while the news was a boost for the UK economy, many economists were surprised by the data.

Ross Walker from the Royal Bank of Scotland comments: “To jump by this much in a month just beggars belief.”

“The differential between surveys and official data is widening. Both can’t be right. It will cast doubt on the weakness of third quarter GDP numbers,” adds Mr Walker.

Last month, the Office for National Statistics (ONS) revealed that the UK economy shrank by 0.4% in the July to September period, meaning the country is still in recession.

The fall in GDP means it is the first time the UK has endured six consecutive quarters without growth - the first time since the ONS began gathering the data in 1955.

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