Manufacturing's good news continues

The one-month figure for September showed output increasing by 0.1 per cent with increases of 1.8 per cent in the chemical and man-made fibres industries, 1.8 per cent in the basic metals and metal products industries and 0.5 per cent in the food, drink and tobacco industries being countered by a decrease of 2.0 per cent in the electrical and optical equipment industries. Commenting on the figures, Barclays head of manufacturing Graeme Allinson said: "Today's ONS figures add to the recent spate of positive news emerging from UK manufacturing. With higher than expected Q3 GDP also reported, it is hoped that the immediate impact of public sector cuts may be less severe than anticipated as the sector continues to bounce back strongly. "However, there remains the potential for further challenges ahead, and an ongoing lack of manufacturing investment in comparison to key international competitors looks set to keep UK manufacturing well behind the global curve. With more than half UK goods manufactured bound for export, David Cameron's hope in seeking to double trade with China over the next few years should hopefully prove a catalyst for further investment in export markets." Chris Williamson, Chief Economist at Markit added: "The good news flow continues", adding that the rate of growth in the industrial sector may have accelerated further in October, driven by a reassuringly strong surge in export growth. He went on: "The data will surely add ammunition to the hawks at the Bank of England, with any extension of quantitative easing now only looking likely if the economic data deteriorate sharply in coming months. While this remains an outside possibility, the sustainability of the UK recovery appears to be worryingly reliant upon manufacturing, and especially export orders. As government spending, construction activity and service sector contributions to GDP look likely to fade in coming months, any significant further appreciation of the pound or weakening of global demand could hurt manufacturing and threaten recovery prospects."