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Sancho Panza

U.k. Manufacturing Grows Fastest In Almost Three Years: Economy

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Bloomberg 2/12/13

'U.K. manufacturing expanded more than forecast in November, indicating the recovery is maintaining its momentum in the final quarter of the year. A gauge of factory activity increased to 58.4, the highest since February 2011, from a revised 56.5 in October, Markit Economics said in a report in London today. That exceeded the median estimate of 30 economists for a reading of 56.1. The report also showed that demand and payrolls rose last month.

Dec. 2 (Bloomberg) -- Kevin Daly, chief U.K. economist at Goldman Sachs Group Inc., talks about the outlook for U.K. growth. He speaks with Francine Lacqua on Bloomberg Television's "The Pulse." (Source: Bloomberg)

The Bank of England raised its forecasts last month and said the recovery has “taken hold” after economic growth accelerated to 0.8 percent in the third quarter. That’s providing an upbeat backdrop for Chancellor of the Exchequer George Osborne as he prepares to deliver new projections and fiscal plans on Dec. 5.

“The U.K.’s recovery is mostly domestic, driven by very loose monetary policy and declining uncertainty,” said Rob Wood, an economist at Berenberg Bank in London. “Now the U.K.’s main export markets are starting to recover –- the euro zone and the U.S. -– trade flows should improve too.”

The pound extended its gain against the dollar after the report before paring its advance. It was trading at $1.6388 as of 11:06 a.m. London time, up 0.1 percent from Nov. 29.

Demand Rises

The U.K.’s manufacturing Purchasing Managers’ Index has been above the 50 level that divides expansion from contraction for eight straight months. Today’s report showed factory production and new-order growth were close to the highest in two decades, while job creation was at its strongest since May 2011.

“The economic plan is working and a recovery is under way,” Osborne said on BBC television yesterday. “In the Autumn Statement, I will say the job is not yet done.”

Export orders also continued grow, with improved demand from customers in Asia, the U.S., Germany and France, Markit said. A separate report on the euro-area showed factory growth in the 17-nation region expanded faster than initially estimated last month.'

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“The U.K.’s recovery is mostly domestic, driven by very loose monetary policy", said Rob Wood, an economist at Berenberg Bank in London

Indeed. Time to put interest rates up to normal levels (and stop all lending support, banking bailouts etc etc).

Edited by Errol

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