Fac­tory fightback ben­e­fits Os­borne

Daily Mail - - City & Finance - By Hugo Dun­can

BRI­TAIN’S strug­gling man­u­fac­tur­ers roared back to life last month in a boost to Ge­orge Os­borne ahead of the Au­tumn State­ment.

The closely watched pur­chas­ing man­agers’ in­dex of ac­tiv­ity in UK fac­to­ries – where scores above 50 show growth – jumped from a slug­gish 51.8 in Septem­ber to 55.5 in Oc­to­ber.

It was the strong­est read­ing since June last year and eased fears that man­u­fac­tur­ers face a pro­longed down­turn amid weak de­mand from over­seas. The 3.7 point gain in Oc­to­ber – which the re­port de­scribed as ‘one of the strong­est reg­is­tered dur­ing the near 24-year sur­vey his­tory’ – was enough to make Bri­tish fac­to­ries the best per­form­ing in Europe.

An­a­lysts said the fig­ures bode well for the fourth quar­ter of the year af­ter eco­nomic growth slowed from 0.7pc in the sec­ond quar­ter to 0.5pc in the third.

Rob Dob­son, se­nior econ­o­mist at Markit, which com­piled the re­port, said: ‘The re­vival pro­vides a ten­ta­tive sug­ges­tion that the man­u­fac­tur­ers are pulling out of their re­cent funk, hav­ing been dogged by re­ces­sion since the start of the year, and may help boost eco­nomic growth in the fourth quar­ter. The big ques­tion now is whether this bounce back is a one-off or the start of a sus­tained re-emer­gence from re­ces­sion.’

A sep­a­rate re­port by con­sumer re­search group Nielsen showed that con­fi­dence among house­holds is at its high­est level on record.

The dou­ble-dose of good news will please the Chan­cel­lor as he pre­pares to de­liver the Spend­ing Re­view and Au­tumn State­ment on Novem­ber 25.

Markit’s sur­vey found busi­ness was boosted by ex­port or­ders from the Mid­dle East, east Asia and the US. But busi­ness lead­ers warned that over­all ex­ports re­main sub­dued.

John Long­worth, di­rec­tor gen­eral of the Bri­tish Cham­bers of Com­merce, said: ‘The UK’s ex­port drive is at risk of go­ing into re­verse gear pre­cisely at the time when it needs to be mov­ing for­ward.’

Phil Couch­man, chief ex­ec­u­tive of DHL Ex­press UK, blamed sub­dued de­mand for UK goods on ‘un­cer­tainty in the eu­ro­zone and the in­sta­bil­ity of the Chi­nese and wider global econ­omy’.

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