Signs of hope for UK manufacturing

Manufacturing has been mired in recession

The latest survey of Britain's struggling manufacturing sector suggests it could be pulling out of recession.

However corporate bankruptcies in the first three months of this year in England and Wales were sharply up on a year ago, according to a second survey.

Small firms bore the brunt of the pain, while Wales and South West England were the regions with the biggest increases in business failures, the Dun & Bradstreet business research group said.

But it seems the worst could be over, according to data from the Chartered Institute of Purchasing & Supply (CIPS).

Looking hopeful?

Its closely-watched survey recorded a jump in manufacturing activity for the third month in a row.

The CIPS index of manufacturing activity measured 50.7 in March, its highest level since February 2001. A reading of more than 50 indicates the sector is growing.

"The index continued to move in the right direction for manufacturers in March, following on from February's upturn," said Roy Aycliffe, CIPS director of professional practice.

Too late for some

But 10,803 British firms went bankrupt in the first three months of 2002, according to D&B.

Corporate bankruptcies in England and Wales

Wales +44%

South West +35%

North East +34%

West Mids +15%

London -4.5%

This represents a 15.4% increase on the January to March period of last year.

The survey, which is not restricted to manufacturing but covers all sectors of the UK economy, found small businesses were worst hit.

Small business bankruptcies rose 20.5%.

For larger firms, the increase in business failures was 9.6%,

Regional differences

Nor was the pain evenly distributed around Britain.

Wales suffered the worst increase, with 44% more businesses going bust than a year-ago. Altogether 439 Welsh firms went to the wall.

The South West saw a 35% jump in bankruptcies, as 1,148 firms failed.

The North East was just behind, at 34%, or 1,406.

The West Midlands' 15.5% increase contrasted sharply with a rise of only 1.2% in the East Midlands.

London bucked the national trend, with fewer businesses going out of business. Liquidations were 4.5% lower at 1,416.

Bankruptcies in Scotland, which has different laws from England and Wales, rose 15.2%.

'Wait and see'

The steep increases were partly due to a rosy first quarter of 2001, "when figures were the lowest they had been for 10 years," said Phillip Mellor of D&B.

"So we will have to wait until the next quarter to be sure than the business failure trend is upwards," he said.