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Manufacturing `out-performs the service sector`

12 October, 2007

The latest round of reports on the state of UK manufacturing sector paint a generally rosy picture, with the British Chambers of Commerce’s quarterly economic survey recording the highest level of domestic sales in the manufacturing sector since it started monitoring the sector in this way in 1989.

The BCC figures, based on a survey of more than 4,700 UK businesses, show manufacturing outperforming the services sector, but also reveal that the UK economy is weakening. Manufacturers’ export performance worsened marginally during the quarter.

Investment by the manufacturing sector is reported to be healthy, with the balance of firms planning to boost investment in plant and machinery rising by five points to a record high of +33%. Those intending to invest in training rose by 13 points to +35% - another record. But the sector also reported that cashflow and confidence have weakened.

Another report, by the CBI, provides a mixed picture. In its monthly industrial trends survey, the CBI found that 23% of manufacturers were reporting below-normal order books - but 29% reported above-normal levels. Despite the strong pound, the manufacturers told the CBI that overseas demand was still healthy.

A third indicator, the Purchasing Managers’ Index (PMI), produced by the Chartered Institute of Purchasing & Supply, shows that the manufacturing sector maintained its growth in production and new orders during September. The volume of new work rose for the 26th consecutive month, with most of the new orders coming from the UK.

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