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Strong CBI factory data fuels ‘booming’ economy talk

Manufacturing saw a surge in output, mirroring growth in UK car production figures. Picture: PA

Manufacturing saw a surge in output, mirroring growth in UK car production figures. Picture: PA

  • by PERRY GOURLEY
 

THE strongest factory growth figures in 18 years yesterday provided further evidence of a sustained recovery in the UK economy.

The CBI’s latest survey found that total order books and output growth were the highest recorded since 1995 with manufacturers also predicting growth to continue at a robust pace over the coming three months.

The monthly survey results coincided with figures showing UK car production in October rose at the fastest pace so far this year.

The key finding of the CBI survey showed that a positive balance of 11 per cent of firms believed order books were above normal in November, helped by signs of a continued recovery among exporters.

The rise in output growth was broad-based, with all but one of 15 sub-sectors – electrical engineering – reporting growth.

Stephen Gifford, the lobby group’s director of economics, said: “This new evidence shows encouraging signs of a broadening and deepening recovery in the manufacturing sector. Manufacturers finally seem to be feeling the benefit of growing confidence and spending within the UK and globally.”

Michael Saunders of Citi European Economics said the “strong reading fits in with other surveys which suggest that the UK economy is booming”.

Howard Archer of IHS Global Insight said there were now hopes that a strengthening UK economy “further lifts business confidence which in turn translates into sustained higher demand”.

“Encouragingly, there is evidence that businesses are now gradually lifting their investment plans,” he added.

The survey showed that 28 per cent of respondents reported that export order books were above normal in November, well above the long-term average, but despite the progress, Gifford said challenges remain for UK manufacturers.

“UK exporters need government support to break into high-growth export markets to reduce their vulnerability to any further eurozone flare-ups.”

The Society of Motor Manufacturers and Traders (SMMT) also said yesterday that UK car production in October rose at the fastest pace so far this year, up by 17 per cent from 2012.

The growth was largely driven by demand for cars to sell in the domestic market rather than for export, the SMMT said. It said 160,854 cars were built in the UK last month, with demand being driven by cheap finance deals and rising consumer confidence.

So far this year, the industry has produced 1.28 million cars, 5.4 per cent more than at the same point in 2012, the SMMT said.

“With European demand showing early signs of recovery, we expect production to continue positively in the coming months,” said SMMT chief executive Mike Hawes.

In the US, the number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting some strengthening of labour market conditions.

Factory output also rebounded this month according to the preliminary US Manufacturing Purchasing Managers Index.

 

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