Manufacturing sector shows modest recovery

| November 8, 2011
Manufacturing sector shows modest recovery

Official figures from the Office for National Statistics show a 0.2 per cent in UK manufacturing output in September, the first increase in four months.

Compared with a year ago, factory output in September grew 2 per cent.

However the figure excludes oil and gas, and mining, and when these sectors are taken into account, industrial output remained unchanged.

The British Chambers of Commerce (BCC) said the figures were reassuring considering the current difficulties in the eurozone and the UK’s ongoing austerity measures.

There is growing pressure for the government to moderate the austerity measures in order to help the UK economy grown.

In contrast to the BCC’s optimism, Chris Williamson, the chief economist at Markit, said that the rate of manufacturing growth was disappointing’.

The Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) showed a contraction in UK manufacturing in October, with a fall from 50.0 in September to 47.4, its lowest level since June 2009.

A reading of above 50 on the index indicates growth.

A fall in new orders contributed to the decline, with companies reducing their backlog in order to maintain activity.

The ongoing eurozone debt crisis was a major contributory factor to the weak demand and in the House of Commons yesterday David Cameron revealed that he is pushing Germany to take action over the crisis.

Mr Cameron wants Germany’s Bundesbank to lift its opposition to the European Central Bank’s (ECB’s) plan to bail out the euro.

The ECB wishes to use eurozone countries’ reserves to boost the European Financial Stability Facility (EFSF) to €1 trillion.

The EFSF was established to safeguard financial stability in Europe by providing financial assistance to euro area Member States.

Germany considers the plan to boost the €440bn euro-fund to €1 trillion a threat to the independence of the Bundesbank.

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