Capital goods industries tipped as top performers

CAPITAL goods industries are expected to benefit from the 'rebalancing' of economic recovery while consumer goods industries are hindered by tax increases and recent rises in import penetration, according to Oxford Economic Forecasting's Industrial Prospects.

The report predicts that manufacturing will outperform over the next years, although there will be considerable variations between the performances of different sectors.

National output is forecast to grow by 3.2 per cent this year, with investment rising by 6.4 per cent and exports increasing by nearly 7 per cent.

Growth in consumer spending, which has so far dominated recovery, is expected to be subdued at 2.9 per cent.

Within manufacturing, OEF expects transport equipment and electrical engineering to perform well but predicts that textiles, clothing, food, drink and tobacco will lag behind.

Construction will suffer if last week's interest rate rise further depresses the housing market, although propsects are brighter for infrastructure and industrial construction and repair and maintenance.

Service sector growth will be subdued by weakening consumer spending growth, but telecommunications should gain from technological advances and stronger competition.

Hotels and catering are expected to benefit from a reviving 'feel good' factor.