'Good news' for manufacturers

Manufacturers have shown more signs they are on the path to recovery after a survey reported a strengthening in domestic and overseas demand.

Economists said the latest data from the CBI suggested the sector was on course to make its first positive contribution to overall GDP growth in a year.

Out of the 471 manufacturers responding to the survey, 21% reported total order books to be above normal, while 23% said they were below.

The resulting rounded balance of minus 3% is well above the long-run average of minus 18% and a significant improvement on the levels of recent months.

The order book boost, which included a rise in export demand, means UK manufacturers expect production to rise over the next three months, with a balance of 15% expecting an increase in their volume of output.

Samuel Tombs, an economist at Capital Economics, added: "For now, then, more good news.

"However, we continue to fear that demand for UK manufactured goods will fade as the eurozone's debt crisis takes its toll."

Today's figures follow other surveys that have suggested trading conditions and confidence are slowly improving.

The Office for National Statistics (ONS) said manufacturing output rose by 1% between November and December, much better than City forecasts for a 0.2% rise, although the sector still contracted in the final quarter of 2011.

Expectations for prices were broadly similar to a month earlier and well below those over the same period a year ago.

Oil prices have reached record levels in sterling terms over recent days amid growing geopolitical concerns.

PA