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The Bank of England's interest-rate setters had more positive news on the economy to chew over at this week's meeting after figures showed British factory output back in growth.
Manufacturing activity last month was up for the first time since March 2008 as companies ratcheted up their production lines again, according to survey evidence from the Chartered Institute of Purchasing and Supply.
Its index of production, on which any score below 50 signals a contraction in output, rose to 50.8 from 47.4 in June. This was well above City forecasts of 47.7.
“The turnaround this signals has been remarkable,” said Rob Dobson, senior economist at Markit Economics, which compiled the survey. As recently as November, the survey was registering just 34.9.
“This suggests the UK economy is likely to record positive growth through the rest of this year and into the next. However, ongoing deleveraging and rising unemployment still suggest that the recovery will be fragile,” said James Knightley, economist at ING bank.
The Bank of England's monetary policy committee starts its meeting on interest rates on Wednesday and is expected to announce at noon Thursday that it will keep the cost of borrowing on hold, although it may opt to increase the quantitative easing process.
Engineering Employers' Federation head of economic policy, Lee Hopley, warned: “Anecdotal evidence from companies shows a lot of uncertainty still remains.”
Reader views (5)
Very well done prime Minister for rescuing the country from the worldwide economic recession, which has hit many other countries far harder than it has us here in the UK
- Keith Price, Luton, England
Well done Keith Price for looking at a single piece of news and thinking Gordon Clown has saved the world. Don't worry about the UK now having the greatest debt in the G20 or the unemployment levels likely to rise to 4m -they don't really count v the staggering announcement of 1 month of growth in the manufacturing industry.
Remember the phrase Keith - one swallow doesn't make a summer - although in your mind it clearly does.
- Dave B, Manchester
The massive financial stimuli were like adrenalin shots to a patient who had collapsed. There's no possibility of any more because the public finances are so fragile thanks to the incompetence of Brown and Darling. The injections will soon wear off and the economy will collapse again - expect currency crises and soaring unemployment.
- Richard Kennard, Welling
So, manufacturing goes down a lot and comes up a little. Keith should get his brain de-washed. If you have extremely negative growth and then a little positive it's called a "recovery". If house prices increase beyond our means it's called a recovery. Funny place we live in.
- Never Eat Tuna Again, London
Well done Gordon Brown for rescuing the country from the worldwide economic recession, which has hit many other countries far harder than it has us here in the UK
- Keith Price, Luton, England
