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Friday, 1 February, 2002, 11:06 GMT
Signs of hope for UK manufacturers
BMW plant at Cowley
The manufacturing sector is showing some signs of recovery
The latest snapshot of the beleaguered UK manufacturing sector has shown that output is continuing to fall.

But there was a sign of hope for the sector as the rate of decline has begun to slow.

The study by the Chartered Institute of Purchasing and Supply (CIPS) found manufacturing activity shrunk in January for the eleventh month in a row.

Within the sector CIPS said the consumer goods sector continued to outperform the rest of industry, reflecting strong levels of consumer spending.

Exports fall again

The latest CIPS survey saw its Purchasing Managers' Index (PMI) rise to its highest level for three months.

It climbed to 46.4 in January from 45.2 the previous month - a figure below 50 signals a contraction in manufacturing activity.

CIPS said UK manufacturers have continued to suffer from the global economic slowdown.

The slump has steadily cut export orders while the high value of the pound against other currencies has also affected overseas sales.

Last month the latest government figures showed manufacturing output fell in December faster than at any time since 1996.

Consumer boost

Within the gloomy overall picture there were some bright spots.

The continued strength of consumer spending has helped those parts of industry supplying the retail trade.

"The consumer goods sector continued to outperform the broader manufacturing economy, and January saw the strongest growth of consumer demand for six months," CIPS said.

There was also a "modest growth of output in the investment goods sector for the first time since June 2001."

More insolvencies

But the number of businesses in the UK going under rose slightly during the last three months of 2001.

New figures from the Department of Trade & Industry showed 3,798 companies were declared insolvent from October to December.

This was an increase of 1.8% on the previous quarter, and a rise of 2.6% on the same period the year before.

The BBC's Andrew Scott
"The talk is upbeat amongst economists"
See also:

14 Jan 02 | Business
UK manufacturing slumps again
10 Sep 01 | Business
UK manufacturers' prices steady
20 Dec 01 | Business
UK economy set to outperform
06 Aug 01 | Business
Q&A: The manufacturing recession
03 Jan 02 | Business
'Bumpier ride' ahead for UK economy
03 Aug 01 | Business
Gloom spreads to UK service sector
07 Aug 01 | Business
CBI: Manufacturers' woe worsens
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