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Manufacturing Sector Grew By More Than Expected In July

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More no-longer-horrifically-god-awful-data-for-now news;

The Office for National Statistics (ONS) said manufacturing output in the UK increased 0.9pc compared with June, driven by increases in transport, equipment, rubber and plastics production.

It was the strongest rise since January 2008 and compared with a 0.5pc rise in June. Economists had been expecting a more modest rise of 0.3pc. The news helped drive sterling more than two cents higher against the dollar, rising to $1.6566.

“A good start to the third quarter and [it] adds to the weight of evidence that suggests the recession is over,†said Alan Clarke, economist at BNP Paribas. “Manufacturing overreacted on the downside when growth was suffering around the turn of the year. We suspect production is now correcting that overshoot and could post some solid gains in the months ahead,†he added.

The expansion in manufacturing output pushed industrial production, which includes mining and quarrying, and electricity, gas and water supply, up by 0.6pc. It marked the first back-to-back increase in industrial production in almost three years, following a 0.6pc rise in June.

“This rise in industrial production provides the most conclusive evidence yet that the UK economy is out of recession,†said Neville Hill, economist at Credit Suisse.

However the British Chambers of Commerce played down the significance of the figures. David Kern, chief economist at the BCC, said: “The larger than expected increase in July manufacturing output supports our assessment that the third quarter of the year may show a return to economic growth.

“However, the manufacturing sector is still facing serious problems and longer-term comparisons show big falls.â€

Lee Hopley, head of economic policy at the manufacturers’ organisation EEF, echoed the BCC’s caution: “Whilst the increase in manufacturing output brings a glimmer of optimism for the sector production levels remain significantly below pre-recession levels,†he said.


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