Manufacturing up, but fears grow for exports
Tuesday 04 October 2011
The UK economy emitted a faint ray of sunshine yesterday with new figures showing that manufacturing output unexpectedly grew in September, for the first time in three months.
The Markit purchasing managers' index, for which a reading of 50 and above represents expansion, rose from a revised 49.4 in August to reach 51.1 in September.
This is comfortably ahead of the consensus forecast, for a contractionary reading of 48.5.
The growth in manufacturing gave George Osborne, the Chancellor of the Exchequer, a much-needed boost as he prepared to address the Conservative party conference yesterday, after a string of economic disappointments, in particular the 0.2 per cent rise in gross domestic product Britain recorded in the second quarter.
However, investor celebrations were muted as the latest Markit/ Cips manufacturing data concluded that most of September's expansion in manufacturing was "achieved through the fastest depletion of backlogs of work for two years".
Adding further salt to the wound, the report revealed that orders for Britain's exports contracted at the fastest rate since May 2009, suggesting that manufacturing output, which is heavily reliant on exports, was likely to deteriorate.
Rob Dobson, a senior economist at Markit, said: "It is hard to escape the fact that the sector's performance has weakened substantially since the opening quarter's growth surge."
Although manufacturing only accounts for about 13 per cent of Britain's economy, the Government hopes it can lead the recovery at the same time as rebalancing business away from financial services.
However, this prospect was dealt a further blow yesterday as the so-called carbon price – a key barometer for production across the European Union – dropped as much as 7 per cent to a two-and-a-half year low.
Tradable permits to emit 1 tonne of carbon dioxide between now and the end of next year fell to €10.06 (£8.60) a tonne yesterday, as the EU's biggest manufacturers and power generators bet that production would be low, reducing their need for permits.
The carbon price is down by 26 per cent since the start of September and 45 per cent from this year's peak in May, indicating that traders believe the EU economy is in for a rough ride, according to Serge Mazodila at Wheldrake Energy.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...