Factory output rises in the north, house prices up in the south

Factory output rose across three northern English regions and in Scotland over the summer, according to a report today that will raise hopes of a narrowing in the traditional North-South divide.

Northern regions are outperforming the South in both output and employment, according to the latest quarterly survey by the CBI, the country's largest employers' group.

But hopes of a long-awaited rebalancing were dented by separate figures showing that house price growth in London outstripped every other region as the capital's average house price broke through £200,000.

Manufacturing industry as a whole stagnated over the latest three months as output fell in the West Midlands and growth ground to a halt across the South, it said. The survey showed the most marked growth was in the North-west and Yorkshire and the Humber with more modest increases in the North-east and Scotland. By contrast, output in the East of England, the South-east and London and the South-west stagnated, while it declined in the West Midlands and Northern Ireland.

Differences between the North and the South were even more telling for orders. At a national level, the volume of new orders fell, contrary to expectations based on better prospects in the Eurozone and hopes for more sustained growth in domestic demand.

The South-west bore the brunt of the decline but volumes of orders also fell in Northern Ireland and the West Midlands. In northern England, and in Wales and Scotland, orders increased.

The downturn triggered a slump in confidence in the South-west and the West Midlands and strong upturns in the North East and Yorkshire and the Humber. Firms cut jobs across the South.

"On a number of fronts, conditions for Northern manufacturers are currently outshining those in the South," said Doug Godden, the CBI's head of economic analysis.

Peter Gutmann, an economist at the financial information group Experian that helped produce the report, said upbeat expectations for export orders in the North were encouraging.

"But not all regions are feeling the benefit of better growth in the Eurozone and serious question marks about the US economy mean exports cannot be relied upon to drive a lasting recovery."

Meanwhile the price of the average home in Greater London rose by 10.2 per cent over the past year, faster than in any other region of England and Wales, the Land Registry said. The rise was twice the pace of the East Midlands, the slowest growing region on 5.2 per cent. The North of England posted a 9.4 per cent rise.

Across England and Wales as a whole between July and September the average cost of a house rose 8.6 per cent to £211,453 from £194,589 a year ago.