Timid recovery lends hope to manufacturers

Published on Wednesday 18 November 2009 20:26

A TENTATIVE recovery in Britain's manufacturing sector has continued into November, according to the CBI.

The business group's latest industrial trends survey, published yesterday, points to rising confidence among under-pressure manufacturers.

Companies quizzed by the CBI predicted a rise in output for a second month as the weak pound eased export woes.

The survey's total order book balance rose to -45 this month from -51 in October, slightly better than analysts' forecasts. The rise in the export order book to -37 from -46 took it to its highest level since April.

Ian McCafferty, the CBI's chief economic adviser, urged caution over the findings, saying rising stock levels left "a question mark over the strength of demand".

He said: "The weaker pound has softened the blow for exports, but the ongoing lack of demand for manufactured goods reconfirms that any recovery will be anaemic and slow."

Nevertheless, the survey will reinforce hopes that the UK could see a return to economic growth in the final quarter of this year, as it follows upbeat data on the crucial services sector.

A survey released earlier this month by the Chartered Institute of Purchasing and Supply showed the services sector growing at its fastest rate for more than two years in October.

Howard Archer, chief UK economist at IHS Global Insight, said yesterday's industrial trends survey "portrays a modestly more upbeat picture."

He added: "While the manufacturing sector is hardly racing ahead and concern persists about the strength of demand over the medium term, the survey supports expectations that industrial production is on course to expand in the fourth quarter for the first time since the end of 2007, thereby helping the overall economy to finally return to growth."