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Monday 19th of July 2010
August 20, 2009    

Recovery hopes as factory optimism grows

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by Kay Murchie

The latest CBI Industrial Trends Survey has revealed optimism within the manufacturing sector.

Figures show that 27% of the 560 companies polled said they would increase output over the next three months, while 32% predicted a fall. The balance of -5 points was the most optimistic in over a year and a nine-point improvement on July.

Commenting on the findings, Richard Lambert, director general of the CBI, said: “Expectations for manufacturing output over the coming three months are the least negative in over a year. This is partly because many firms have run their stock levels down quite aggressively over the summer, so some manufacturers are now looking to raise production.”

“It looks like de-stocking in the manufacturing sector may be coming to an end, which offers a further sign that the UK economy is starting to stabilise,” added Mr Lambert.

Vicky Redwood, UK economist at Capital Economics, described the latest survey as good news and the figures show further evidence that the manufacturing recovery was “picking up pace”.

However, she cautions the improvement seems almost solely driven by the fact that companies have run their stocks down to levels more suited to low demand.

“There are still precious few signs of the rise in underlying demand that will be necessary if output is to start posting decent and sustained rises,” explains Ms Redwood.

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