Industry shrugs off impact of fuel crisis

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The Independent Online

The modest recovery in manufacturing industry continued in September despite the disruption caused by the fuel blockades.

The modest recovery in manufacturing industry continued in September despite the disruption caused by the fuel blockades.

Output growth slowed and fuel shortages hit deliveries, according to the monthly purchasing managers' survey. However, economists said it was surprising the protests had not had a bigger impact.

The index of activity edged down to 51.6, from 51.8 in August, indicating that manufacturing continued to recover slowly. Output and new orders increased, but employment fell as companies tried to cut costs in response to the 14th successive monthly increase in their costs.

The report noted that the survey has recorded an increase in employment in only one month since the start of 1998.

The expansion continued to be patchy. Although output of consumer goods increased during the month, manufacturers of investment and intermediate goods reported lower sales, due in large part to the strength of the pound against the euro.

Sir Eddie George, Governor of the Bank of England, said yesterday the euro was undervalued and its recovery would help rebalance the UK economy as well as creating the conditions for eventual UK convergence with the eurozone. He told members of the Nordic Chambers of Commerce in London that the jury was still out on whether Britain had yet achieved a sustainable degree of convergence.

The purchasing managers' survey is not expected to have much sway of the Monetary Policy Committee's vote on Thursday. It needs to be assessed alongside the companion survey of the much bigger services sector, due tomorrow.

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