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Manufacturing recovery is underway

Jeegar Kakkad February 10, 2010 10:53

2009 was a painful year for most manufacturers, but it looks like the sector ended the year on a strong note.

Today's Index of Production figures for December suggest that manufacturing grew by 0.8% between q3 and q4 last year.

Although that strong growth reflects a weak summer - there were plenty of shutdowns in August - the growth in the Autumn was broad-based. And that's (hopefully) a sure sign that there's decent amount of momentum behind the recovery.

Will q1 2010 be just as strong? I'm beginning to change my mind. Activity could fall off because of the wintery start to the year, but we're starting to hear more positive stories from manufacturers about their prospects.

Many companies I've spoken with over the past 6 months said that spring 2010 was always their target date for recovery - the question was what happened in between now and then. The encouraging news is that spring is getting closer and the potential pitfalls - exchange rate volatility, slower global growth and withdrawal of stimulus - are falling by the wayside.

Two big concerns remain: China and the public finances.

Can China avoid a wage-price inflationary bubble without derailing its economy? Can the (next) UK government credibly repair the public finances?

Those are the two big questions remaining for 2010.

 

Tags:

Growth

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