Manufacturing output grows for the first time in two years

MANUFACTURERS expanded their production for the first time in two years in the three months to January as demand for UK exports increased, the Confederation for Business Industry (CBI) said yesterday in its quarterly Industrial Trends survey.

A net 11 per cent of manufacturers said output had risen over the past quarter, raising hopes that next week’s GDP figures will show a return to growth in the last quarter of 2009.

Export orders rose for the first time since January 2008, boosted by the relative weakness of sterling and improving global demand, the CBI said. The slower pace of destocking also gave output a boost.

But the business lobby warned that the economic outlook for the manufacturing sector remains uncertain as domestic demand remains weak and some firms struggle to access finance.

Ian McCafferty at the CBI said: “With domestic demand still weak, and credit remaining constrained for some companies, firms expect growth to be more modest in the next quarter. This underlines our view that the UK’s economic recovery will be slow and protracted.”

But sentiment about the overall business situation is continuing to improve, with a net 12 per cent of manufacturers more optimistic than three months ago.