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UK factories see rebound

MANUFACTURING output rose at its fastest pace since July 2002 in September, returning to growth after a sharp drop in output in August. <br /><br />Data from the Office for National Statistics (ONS) showed that factory output rose 1.6 per cent on August&rsquo;s downwardly-revised two per cent contraction. But output is still 10.5 per cent lower than in September 2008.<br /><br />The wider industrial output measure also saw strong gains, expanding by 1.7 per cent in September but it failed fully to reverse the steep drop in the previous month. As such, production still fell by 0.8 per cent in the third quarter overall, a worse performance than the 0.7 per cent estimated by the ONS in its third quarter GDP preliminary figure. <br /><br />Capital Economics&rsquo; Jonathan Loynes said: &ldquo;UK industrial production figures confirmed that the recovery in the industrial sector stalled in the third quarter and hence did little to support suspicions that the overall economy is recovering more quickly than the GDP figures suggest.&rdquo;<br /><br />It had been hoped that the dire GDP data would be revised upwards at a later stage, but the lack of recovery in the manufacturing sector does little to support this view. <br /><br />The better manufacturing and industrial output figures, along with the more upbeat purchasing manager&rsquo;s index earlier this week, suggests that the hard-hit sector is finally starting to turn the corner.<br /><br />The rebound in factory output was encouragingly broad-based, with only utilities output showing a small decline. <br /><br />Manufacturers are benefiting from sharply reduced stock levels, as well as from the weak pound. The slide in sterling has improved both exporters&rsquo; international competitiveness and has helped firms become more competitive in the domestic market.