Boost to business sentiment and recovery

The long nuclear winter of British manufacturing may be soon drawing to a conclusion. The latest survey of business confidence among managers in the sector suggests that output may soon start to increase.

The survey, conducted by Markit for the Chartered Institute for Purchasing and Supply, recorded an overall reading of 47 in June, up from 45.4 in May.

The figure was higher than analysts' expectations: a figure of 50 or above on all the indices represents future expansion. The export orders index climbed to an 11-month high.

The Cips indices are regarded as reliable leading indicators of trends in the economy, with about a nine-month lag. David Noble, the chief executive at the Cips commented: "There are some signs of relief for the UK manufacturing sector. One of the reasons for this improvement may be that firms are adapting to market changes. Many are expanding their promotional activities and becoming more willing to discount goods in order to secure even the slightest hint of demand.

"However, employment levels are still falling which demonstrates that we still have a long way to go before the sector returns to full health."