Optimism on sales highest since 1989

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OPTIMISM among UK executives over sales in the third quarter of this year rose to its highest level since 1989, confirming that British business believes the recovery is firmly in place, Dun & Bradstreet said yesterday.

The business information firm said its latest survey of worldwide optimism showed that, in Britain, expectations of higher profits slipped slightly but confidence in employment prospects rose.

Manufacturing investment between April and June fell to its lowest since early last year, despite a rise of 4 per cent in real company profits, figures from the Central Statistical Office showed.

Factory investment fell 1.4 per cent in the second quarter, to a seasonally adjusted pounds 2.5bn at 1985 prices. Gross trading profits rose 4.8 per cent to pounds 17.6bn. Government consumption rose by 1.1 per cent while investment fell by 0.7 per cent.

Consumer spending rose by 0.5 per cent in the second quarter, after adjusting for inflation, while income from employment fell slightly. Bank of England figures showed a slight pick-up in the growth rate of M4 money supply - cash plus bank and building society accounts - from 3.3 to 3.6 per cent in July.

The Building Societies Association reported a slight fall in net new mortgage commitments to pounds 2.9bn last month, while the societies saw a net outflow of funds of pounds 61m, largely reflecting the BT share offer.

The D&B survey showed that European optimism over future sales rose sharply. But this masked a mixed picture in which confidence was higher in Britain, France, Italy and the Netherlands but fell in Germany and Belgium.

In North America, overall business optimism held steady. Joe Duncan, D&B's chief economist, said: 'In the US business optimism remains firm, despite concerns regarding the impact of the administration's fiscal policy.'