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Official stats show slight rise in manufacturing output

10 June, 2009

There is a glimmer of hope in the latest official figures on the state of British manufacturing. According to the Office for National Statistics (ONS), manufacturing output expanded by 0.2% between March and April – the same rise as the previous month.

But manufacturing output for the three months to April was 2.8% lower than during the previous three months, and 13.2% lower than the same period a year ago.

Breaking down the figures shows that while some sectors are improving, others are still in decline. In the three months to April, output in the chemicals and man-made fibres industry rose by 2.5% compared to the previous three months, while the food, drink and tobacco sector saw a 1.6% increase in output.

However, during the same period, output from the machinery and equipment market fell by 7.8%, transport equipment dropped by 7.6%, rubber and plastics products slipped by 7%, and the metals sector recorded a 6.5% decrease in output.

Between March and April, output increased in six of the ONS’s 13 manufacturing sub-sectors, including transport equipment (a 3.2% rise), chemical and man-made fibres (2.3%) and paper, printing and publishing (1.6%). Outside of manufacturing, output in the mining and quarrying sector rose by 2.4% between March and April. Still in negative territory, however, were basic metals (with a 2.2% drop in output) and “other manufacturing” (with a 3.8% fall).

The ONS figures follow a report from the accountant BDO Stoy Hayward which suggests that the UK manufacturing sector is starting to show signs of rallying with both optimism and output levels at a seven-month high.

The latest edition of BDO’s Manufacturing Optimism Index – which measures business confidence and predicts economic growth two quarters ahead – rose to 87.4 in May, from 86.4 in April. BDO says that this is “extremely positive”, given that the index reached a 12-year low of 79.4 in March.

The company also reports that output levels increased for the second consecutive month from 83.6 in April to 86.0 in May – the biggest monthly increase since December 2007.

“It’s still too early to call the bottom of the market,” says Tom Lawton, head of manufacturing at BDO Stoy Hayward, “but these are certainly some positive results and could suggest that things are beginning to look up for the UK’s manufacturers.

“The manufacturing sector was one of the first to feel the effects of the credit crunch when order books collapsed,” he adds, “however, anecdotally we’re now hearing that manufacturers are looking to re-stock and believe that they could be looking at the bottom of the cycle”.




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