Manufacturing recovery gathers pace

Manufacturing output rose twice as fast as expected in October, suggesting the country's economic recovery remains on track in the final quarter of this year.

Output rose 0.6 per cent, the Office for National Statistics said, its biggest rise since March and double expectations for a 0.3 per cent rise.

The wider measure of industrial output fell 0.2 per cent on the month, confounding expectations for a 0.3 per cent rise.

But the decline was partly due to seasonal factors and analysts said this traditionally volatile component did not alter the broader picture of an economy that is slowly becoming more balanced.

There was no market reaction to the data, which did little to alter expectations that the Bank of England will leave interest rates on hold this month and for some months to come as policymakers weigh up the risks to the recovery from upcoming government spending cuts.

David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: "These figures are better than expected, and provide welcome confirmation that the recovery in manufacturing is gathering momentum. We believe that this will ensure that GDP growth remains positive in the fourth quarter of 2010, albeit at a slower pace than in the third quarter.

"With manufacturing output now expanding faster than services and total GDP for four consecutive quarters, we may at last be seeing the much-needed rebalancing of the economy."