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Wednesday, 1 May, 2002, 09:07 GMT 10:07 UK
Surveys raise UK economy's hopes
Ford Mondeo factory
The UK manufacturing sector is beginning to recover
More evidence has emerged that suggests the troubled UK manufacturing sector is finally heading for recovery while the retail sector remains healthy.

The latest survey from the Chartered Institute of Purchasing and Supply's (CIPS) showed the manufacturing index rose in April to its highest level since December 1999.

Demand increased, with manufacturing exports rising at their fastest rate for five years, the CIPS said.

At home, strong demand for summer clothes, DIY equipment and groceries sent retail sales soaring last month, a separate survey by the Confederation of British Industry (CBI) showed.

Strong consumers

Seven in 10 firms reported rising sales in April while just 13% said their sales fell.

The balance of 57% is the highest figure since August 1988, which suggests that consumer spending is holding up well, according to the survey.

"The underlying growth in retail sales is still slightly slower than last autumn," said the chairman of the CBI's Distributive Trades Survey, Alastair Eperon.

This, together with the strong manufacturing performance, suggested that the UK economy is strengthening.

"Many firms suggested that the recovery of the US manufacturing economy had acted as a catalyst to growth throughout much of Europe," CIPS said.

"Demand from the Middle and Far East was also reported to have grown in April."

Better than expected

UK firms reported higher volumes of new business both at home and in their exports markets, sending the CIPS index soaring to 53.4 in April from 50.6 in March, well above economists' forecast of 51.3.

Any CIPS reading above 50 signals expansion, and the higher the figure, the faster the growth.

April marked the third month in a row when the index came in above the 50 mark.

Soaring exports

The manufacturing sector has been bogged down by the strength of sterling which has made UK firms' exports more expensive.

But in April, exports rose faster than they had done for more than 5 years, CIPS said.

New export orders index rose to 55.1 from 50.0 in March, its highest level since November 1996.

Caution remains

Despite signs of strength, many manufacturers remained cautious.

New hiring of staff remained low and companies were still laying off workers, as indicated by the employment index which was unchanged at 46.4.

And although many firms reported a sharp fall in their stock, they were loath to begin rebuilding their inventories, as indicated by a fall in the stocks of purchases index to 44.3 in April from 45.6 in March.

See also:

23 Apr 02 | Business
UK manufacturing finds new optimism
09 Apr 02 | Business
Fresh hope for manufacturing
01 Feb 02 | Business
Signs of hope for UK manufacturers
06 Aug 01 | Business
Q&A: The manufacturing recession
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