Hard-hit manufacturers saw output rise for the first time in two years in the three months to January as overseas trade threw the sector a lifeline, the CBI business group said yesterday.
Its industrial trends survey for January showed an 11% balance of firms saw higher volumes in the quarter — higher than expected and the strongest figure since January 2007. The measure was last positive in January 2008.
Ian McCafferty, CBI chief economic adviser, said: “After nearly two full years of falling output, manufacturers are seeing a return to modest growth, thanks in part to improved overseas demand and much lower stock reductions.
“It is encouraging that the weaker pound is now providing firms with some respite as global demand improves.”
Exports are rising for the first time in two years, with the first quarterly increase since January 2008. A balance of 6% of firms said exports had grown.
Firms are the most optimistic about export prospects for the coming year than at any time since July 1995.
Mr McCafferty added: “Exports are rising for the first time in two years, as UK-made goods are looking more attractive in overseas markets.”
However, he said the manufacturing sector is ‘not out of the woods’ as domestic demand is still weak and access to credit remains constrained for some firms.
Mr McCafferty said the UK economy left recession in the last quarter of 2009, following ‘modest growth’.
He added that the business group would be looking for an export-led recovery, although he warned it was ‘early days’.
“I think around the world generally we are starting to see economic recovery from the downturn of last year,” he said.
But he added fourth quarter growth was likely to have been boosted by a slowdown in de-stocking and the strong Christmas enjoyed by retailers.
He said the economy in the first half of 2010 was ‘likely to remain sluggish’.
Threats to UK recovery include tuncertainty over the timing of measures to get public finances under control because of the general election and any further increase in oil and commodity prices.