UK factories return to life

MANUFACTURING activity grew in October at its fastest rate in almost two years, boosted by a growth in new orders, according to a leading survey published yesterday. <br /><br />The CIPS/Markit purchasing managers&rsquo; index (PMI) showed activity surge to 53.7, well above the 50 level that indicates growth. The survey marks a return to expansion for the stricken manufacturing sector, which had unexpectedly contracted slightly in September.<br /><br />The growth was fuelled by a sharp rise in the new orders balance, which is at its highest level in nearly six years. There were also reports of firms moving closer to restocking following a sustained period of inventory depletion.<br /><br />David Noble, chief executive at the Chartered Institute of Purchasing and Supply, said: &ldquo;It appears that the manufacturing sector has turned a corner and is starting to pull itself out of recession.&rdquo; <br /><br />&ldquo;However, the sector has been so hard hit since the recession began that it will be a long time before it returns to its previous level.&nbsp; Manufacturing is still fragile and will be highly vulnerable for some time to come,&rdquo; he added.<br /><br />Rob Dobson, senior economist at Markit, agreed, but stressed that caution remained the watchword for the sector. &ldquo;Job losses are still running at a fast rate and cost pressures are starting to re-emerge. The recent PMI data may represent a positive first step on the road to recovery but the track back is likely to be long and uncertain,&rdquo; he added. <br /><br />The PMI data raises hopes for the manufacturing sector, which saw a shock drop in production in the third quarter according to official data.