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UK manufacturing growth remains strong for end of 2017

Welding
Britain saw the highest three-month manufacturing growth since 2014.

According to the survey, the Markit/Cips UK manufacturing Purchasing Managers’ Index (PMI) of factory sentiment showed activity recorded an average rate of 57 in the three months to December. This is the strongest recording in three-and-a-half years (since June 2014).

Though last month saw a dip to 56.3 from 58.2 in November, it remained well above the level of 50, which represents growth.

An increase in production is linked to an increase in orders over the last 18 months. Growth was strongest among producers of partly-finished goods; 54% of companies said they expect an increase in production throughout 2018.

UK factories see biggest order books in nearly 30 years

Manufacturing
British factories are benefitting from an export boom as the pound weakens and demand from strong eurozone economies increases.

A survey by the Confederation of British Industry (CBI) shows that 42% of manufacturers increased output in the past three months. Only 11% said they decreased, while 28% said order books are busier than usual.

A separate survey by the CBI and Pertemps Network Group states that 51% are planning on hiring to meet the demand.

The strong jobs market can be linked to this. However, households are still under pressure as house prices are overpowering wages but the intensity has eased slightly. The IHS Markit Household Financial Index rose from 43.5 last month to 43.9 this month.

CBI Head of Economic Intelligence, Anna Leach, said of the findings: “As we head towards the end of 2017, UK manufacturers’ total order books remain at a near 30-year high, with export order books remaining at their strongest since the mid-1990s.

“While the lower level of sterling continues to support exporters, cost pressures remain intense. Businesses will expect to see the government’s Industrial Strategy make rapid progress next year to support manufacturing and the wider economy in every corner of the UK.”

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UK economy beats 2017 third-quarter expectations

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The British economy grew by 0.4% in the third quarter but difficulties still lie in the current Brexit landscape.

Gross domestic product (GDP) grew 0.4% from the period July to September, which is up from the 0.3% of the last quarter and 0.1% higher than initially expected, according to the Office for National Statistics figures.

This small growth will boost the chances of the Bank of England’s Monetary Policy Committee raising interest rates when members meet next week.

However, the economy is growing at a slower pace than it was last year. Manufacturing had a slow second quarter but jumped to boost third-quarter figures even with construction slumping to a second-quarter loss in a row. But the greatest contributor to growth during this period was the service sector, which expanded by 0.4% in itself.

Last quarter’s 0.3% growth was only half that of the 19-member eurozone and the lowest amongst the G7 nations.

The new figures shed light on the potential to a rise in rates which, if to occur, would be the first time a rates rise has happened in the UK since July 2007.