Cautious welcome for improved manufacturing output data

The single month figure for September showed that output from the UK's manufacturing industries increased by 1.7 per cent, a figure that carried with it the usual 'government health warning' that "monthly growth rates are volatile". The most significant increases in output were 8 per cent in the electrical and optical equipment industries, 3 per cent in the transport equipment industries and 4.2 per cent in the 'other' manufacturing industries. The most significant decrease in output was 1 per cent in the machinery and equipment industries. The more reliable three-month figure for the third quarter of 2009 showed output decreasing by 0.1 per cent compared with the previous quarter. The most significant falls were 3.6 per cent in the paper, printing and publishing industries and 3.2 per cent in the machinery and equipment industries. The most significant rise was 3.1 per cent in the transport equipment industries. Commenting on the new statistics, Graeme Allinson (pictured), head of manufacturing, transport and logistics at Barclays, said the monthly rise showed glimmers of an industrial recovery and echoed the Chartered Institute of Purchasing and Supply's Purchasing Managers' Index released on Monday. "The figures released today make the 0.4 per cent decline in third quarter GDP reported by the ONS in October look a little less bleak," he went on. "Over the past two or three months we've noticed innovative UK manufacturers are capitalising on the increase in global demand for consumer durables and capital goods, while the competitiveness of a still weak sterling is continuing to assist exporters. "Order books are at last starting to look healthier, however whether this recovery will retain its momentum and prove sustainable throughout 2010 needs to be considered in light of the uncertainty created by the UK's political situation and the changes that may ensue after the next general election, which may impact demand." At the manufacturing organization EEF, senior economist Jeegar Kakkad said the figures indicated an inevitable rebound from the steep fall in output over the last year. "However," he went on,"one month's figures do not suggest we are out of the woods or that the shape of any recovery is now determined. Policymakers cannot afford to take their foot off the pedal as the risks to losing momentum remain."