Manufacturers boost recovery hopes

 

Hopes for the economic recovery were boosted today as a business survey showed an unexpected improvement in orders and confidence in the manufacturing sector.

A balance of 7% of manufacturers told the CBI this month that they expect to increase their volume of output in the next three months, compared to a balance of 3% in May who expected business to decline.

The flow of orders also saw an improvement in June, the CBI said, with an increase in the number of businesses reporting order levels above normal, including a surprising improvement in export orders.

The wider economy entered a double-dip recession in the first quarter of 2012 and recent signs have suggested the country may struggle to return to the growth in the second quarter.

Ian McCafferty, CBI chief economic adviser, said: "Despite facing continued instability within the eurozone, UK manufacturers have seen a modest rebound in orders from both their domestic and export markets."

The survey presented further evidence that the economic climate is weighing on companies' pricing power as expectations for output price inflation weakened.

Gross domestic product (GDP) shrank by 0.2% in the first three months of 2012, following a 0.3% contraction in the final quarter of last year.

A slide in construction output and a stagnant services sector were blamed for the dip, which had not been expected by experts after a run of strong PMI manufacturing surveys.

Economists have already raised concerns about the second quarter, as additional bank holidays for the Queen's Diamond Jubilee are expected to knock growth.

Howard Archer, chief UK and European economist at IHS Global Insight, said the data offered "glimmers of hope for the UK economy".

But he warned: "There is still a very real danger that the economy will suffer further contraction in the second quarter, especially as it is handicapped by the extra day's public holiday resulting from the Queen's Diamond Jubilee. And the outlook remains highly uncertain and problematical."

Mr Archer said a further boost to the Bank of England's quantitative easing programme next month is still likely.

Pressure is mounting on Bank of England policymakers to bolster Britain's prospects following the return to recession in the first quarter of the year and the mounting debt crisis on the continent.

Rate-setters held off from injecting more cash into the economy through QE earlier this month, but the consensus among economists predicts another multibillion-pound injection in July.

PA

Independent Comment
blog comments powered by Disqus
Top stories
News in pictures
World news in pictures
UK news in pictures
UK news in pictures
More stories
       
Independent
Travel Shop
Imperial Cities of Morocco
Seven nights half-board from only £799pp Find out more
Historic Sicily
Seven nights half-board from £799pp Find out more
4* all-inclusive Crete
Seven nights from only £399pp Find out more
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Andrew Mitchell: 'It's no good feeling hard done by'

Andrew Mitchell: 'It's no good feeling hard done by'

In his first interview since 'plebgate', the former Chief Whip opens up just enough to concede that, in politics, you have to take the rough with the smooth
Corruption and the FCO: Blue skies, white sands, dark clouds

Corruption and the FCO: Blue skies, white sands, dark clouds

Special report: Met police call for criminal inquiry into former diplomat's Cayman Islands rule
Fallen angel: Winona Ryder on bouncing back from her decade in the wilderness

Fallen angel: Winona Ryder bounces back

She owned the 1990s... but then she disappeared. Now, Ms Ryder is back with quite the bang in her latest role, as the wife of a notorious real-life Mob hitman.
Roman Polanski shakes Cannes Film Festival

Roman Polanski shakes Cannes Film Festival

The director's new film, 'Venus in Fur', is one of the raciest on offer
Rev Richard Coles: 'I don’t have any concerns that God is cross with me for being gay and eventually the Church won’t either'

Rev Richard Coles on the Church and homosexuality

The mellifluous, erudite and witty Coles is the nation's most pop-culture-friendly priest
'Baghdad likes to live from crisis to crisis': Civil war looms in Iraq

Patrick Cockburn: Civil war looms in Iraq

The governor of Kirkuk - one of the country's most violent but successful provinces - fears the worst
Written on the body: Tattooists at pains to point out their artistic credentials

Written on the body

Tattooists at pains to point out their artistic credentials
Conquering Everest: 60 facts about the world's tallest mountain

Conquering Everest: 60 facts about the world's tallest mountain

The IoS marks the sixtieth anniversary of Sir Edmund Hillary and Tenzing Norgay first reaching the peak of the highest mountain on Earth
A new, and irreversible, Dust Bowl looms

Rupert Cornwell: A new, and irreversible, Dust Bowl looms

The destructive power of tornadoes will be as nothing once the Great Plains' vast underground water reserve dries up
Every creature's needless death diminshes us all

Philip Hoare: Every creature's needless death diminishes us all

A 60 per cent decline in our national species should alarm us, yet few of us act. But to mind more about animals would reflect well on society
Killing with kindness: Burma's religious battleground - and the monks at the heart of it

Killing with kindness: Burma's religious battleground

Six years ago, the world cheered the monks behind Burma’s Saffron Revolution. Now, a horrific new eruption of religious slaughter is being blamed on a 'Buddhist Bin Laden'.
Let's take it outside: Bill Granger's Bank Holiday feast

Let's take it outside: Bill Granger's Bank Holiday feast

You can’t always depend on the weather – but you can avoid the pitfalls of the British barbecue by preparing an elaborate outdoor feast indoors ahead of time...
The Calvin report: Stirring Champions League final shows how far English game must advance

The Calvin report

Stirring Champions League final shows how far English game must advance
10 big questions for the British & Irish Lions to answer

10 big questions for the British & Irish Lions to answer

Warren Gatland's squad fly Down Under aiming to do justice to the expectations – and hoping the Wallabies stay in the pub
The Last Word: Golf must end the hypocrisy before its halo slips totally

The Last Word

Golf must end the hypocrisy before its halo slips totally