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EDITIONS
Monday, 4 February, 2002, 07:10 GMT
Manufacturing's 'ray of light'
Containers being loaded
Manufacturers argue the strength of sterling hampers exports

The UK's fourth recession in a decade has not entirely killed off hope in the manufacturing sector, a new report says.

The "Success in Business" survey, run jointly by HSBC Bank and the British Chambers of Commerce, said that just over half the UK's firms are seeing their orders and sales rising.

The survey asks 14,200 businesses for their views on how the economy will affect them in the year ahead.

Nearly three out of four manufacturers said they planned to introduce new products or services in the coming year.

Price pressure

"Not all businesses have been affected in the same way during this economic slowdown, and the survey does suggest there is some ray of hope," said Steve Bottomley, head of HSBC Invoice Finance.

"Businesses appear to be more resilient than in the past."

With retailers and wholesalers handicapped in their ability to raise prices, most of the companies surveyed said they said improving customer service would be a key to their performance in 2002.

Still, over half the firms surveyed said they were seeing rising levels of new business. And 57% said sales were up by more than a fifth in the past 12 months.

Sterling blamed

Meanwhile, the fondness of manufacturers for the euro was confirmed by the survey.

While almost half of retailers and a third of smaller companies said the introduction of euro notes and coins was a worry, most manufacturers were receptive to it.

Many in the sector have long blamed the high level of the pound for their woes.

The strong pound, they say, makes UK-produced goods too expensive abroad.

Sterling's current level exceeds even that seen in the late 80s and the early 90s, when the pound was a member of the European Monetary System, the euro's precursor.

Green shoots?

Despite the more upbeat tone of the survey, recent snapshots of manufacturing remain bleak.

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.

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.

Will the UK economy feel the impact of the US slowdown?

Economic indicators

Analysis

UK rate decisions
See also:

01 Feb 02 | Business
14 Jan 02 | Business
10 Sep 01 | Business
20 Dec 01 | Business
06 Aug 01 | Business
03 Jan 02 | Business
03 Aug 01 | Business
07 Aug 01 | Business
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