Manufacturing output robust but experts warn on Europe

The index of manufacturing from the Office for National Statistics showed that output in May 2010 rose by 4.3% compared with May 2009, and was up a modest 0.3% on the previous month while the more reliable three month figure was 2.6% better than the previous three months Jeegar Kakkad, senior economist at the manufacturers' organisation EEF said the recovery in manufacturing appeared to be back on track in May as the pick up in output partially reversed a dip in April and year on year gains continued to look reasonably solid. "Nevertheless a continuation of the steady recovery we've seen over the first half of this year isn't guaranteed as question marks hang over the strength of recovery in European markets," he warned. At Barclays, head UK manufacturing, transport and logistics Graeme Allinson believed that the figures confirmed that UK manufacturing was in a much better position than it was 18 months ago, experiencing strong year on year growth and a more positive employment outlook. But he too warned: "... very recently a lack of certainty over near-term prospects has been hampering UK manufacturers' confidence in continued investment, as demand within the EU in particular looks shakier." He had also pointed to "a noticeable increase in international companies interested in the UK manufacturing sector, with US companies in particular beginning to sniff out acquisition opportunities, highlighting the fact that while the sector still feels undervalued at home, international buyers see underlying strength. "UK manufacturing would greatly benefit from an injection of confidence in itself. To remain competitive globally, confidence and targeted investment are more important than ever." Year on year, output increased in nine of the 13 manufacturing sub-sectors and fell in four. The largest increases in output were in the machinery and equipment industries and the basic metals and metal products industries.