UK manufacturing outlook 'bright'

Britain's factories roared into life in September as output bounced back after a dismal August, according to official figures

Manufacturing output increased by a stronger-than-expected 1.2% in September on a month earlier and was up 0.9% between July and September on the previous quarter, the Office for National Statistics said.

Economists said September’s rebound would ensure the sector’s recovery remained on track, clawing back a surprise fall the month before, when output dropped 1.2%.

The figures follow a hat-trick of positive industry surveys in recent days showing growth has continued into October across manufacturing, construction and services sectors.

The wider measure of industrial production, which includes mining, power generation and water, increased by 0.9% on a month earlier, the ONS said.

Manufacturing growth in September was driven by sectors including pharmaceuticals, transport equipment, computers, electronics and optical products.

David Kern, chief economist at the British Chambers of Commerce, said the manufacturing recovery would “boost confidence” in the sector.

Kern said: “We remain cautiously optimistic about the sector’s ability to recover despite the tough economic environment at home and abroad.” But he warned that manufacturing “virtually stagnated” between July and September compared with a year earlier, with factory output increasing by 0.1%.

IHS Global Insight economist Howard Archer said the underlying trend in manufacturing looked “healthy” and should ensure another solid quarter of growth, after Britain’s economy expanded by 0.8% in the third quarter.

He added manufacturing could be volatile over the summer, when holidays affected factory output.

Archer said: “Manufacturers will be hoping that the recent extended good news on the UK economy further lifts business and consumer confidence which in turn translates into sustained higher demand for capital goods and consumer durable goods.”

Samuel Tombs at Capital Economics said: “With recent improvements in business confidence suggesting that firms are becoming more willing to invest and no signs yet that the recovery in consumer spending is fading, the near-term outlook for manufacturers looks bright.”


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