Factory fightback benefits Osborne
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’.