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UK manufacturing output continues to grow

10 April, 2008

The performance of the UK manufacturing sector continues to defy the downturn in the economy, according to the latest statistics. Manufacturing output rose by 0.4% between January and February this year, while the output for the past three months was 0.3% higher than during the previous three months, and 0.9% higher than the same period a year before.

The figures, issued by the Office for National Statistics (ONS), also show that during the past three months, two sectors of industry – transport equipment, and chemicals and man-made fibres – grew by at least 2%. The only significant contraction occurred in the pulp, paper, printing and publication sector, where output dropped by 1.1%.

The ONS figures are more positive than those produced a week earlier by the Chartered Institute of Purchasing and Supply and NTC Economics. The CIPS/NTC’s monthly Purchasing Managers’ Index showed that rate of output growth in UK manufacturing fell to a 15-month low in March – but that output continued to expand for the 32nd month in a row. According to the CIPS/NTC survey, companies are sustaining output levels partly through a sharp reduction in work backlogs.

"March saw a tougher time for UK manufacturers as inflationary pressures added to their uphill struggle against rising input costs," comments Roy Ayliffe, director of professional practice at the CIPS. "Purchasing managers reported high increases in input prices of essentials such as oil, chemicals and transportation, which were compounded by the weakness of sterling against the Euro and the cost of raw materials sourced in the Eurozone.

"On a more positive note," he adds, "the UK manufacturing sector continued to increase its overall output and, after months of decline, employment levels rose as companies, particularly in the consumer and intermediate goods sectors, added to their workforce for the first time this year."

"Although recent interest rate cuts may have provided support for some manufacturers," remarks NTC economist, Rob Dobson, "weaker demand as a result of tough credit conditions, slower global economic growth, client uncertainty and an associated reluctance to sanction non-vital expenditures means that a further loosening of monetary conditions should still be expected in the near term."

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