Factory output puts economy in growth

Mortgage approvals are on the increase, new figures from the Bank of England show. Picture: Getty

British manufacturing strengthened last month and mortgage approvals in January were at their highest since November 2007.

However, there was another fall in lending to businesses, a reminder that the recovery has yet to take hold fully in other areas of the economy.

Hiring in factories picked up at the fastest rate since May 2011, according to the Markit/CIPS Manufacturing Purchasing Managers’ Index.

Rob Dobson, senior economist at Markit, said: “The survey suggests we should expect another quarter of robust economic growth in the first quarter.”

Figures from the Bank of England (BoE) also showed that lenders approved 76,947 mortgages in January, the most since near the start of the financial crisis, compared with 72,798 in December and more than forecast by analysts.

The Bank also released usage statistics for its Funding for Lending Scheme (FLS), introduced with the UK government in 2012 to boost lending to households and businesses.

Net lending by FLS participants was £5.8 billion during the fourth quarter of 2013, down from an upwardly revised £6.2bn in the third quarter.

Lloyds Banking Group topped the list of lenders under the scheme, followed by Nationwide Building Society.

But Royal Bank of Scotland and Santander UK cut their net lending by £2.3bn and £1.4bn respectively. And despite January’s surge in mortgage approvals, levels are still short of the roughly 90,000 a month seen before the 2008 financial crisis.

BoE governor Mark Carney and other officials have played down suggestions that the housing market is overheating.