Manufacturing output up in July

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The index of production numbers, released this morning, showed that manufacturing grew by 0.1% in the month to July, or 0.5% over the three-month period. Although not an astonishing growth rate, after several disruptions in the last few months, today's numbers suggest that manufacturing has started the third quarter on a positive footing.

As we reported in Manufacturing Outlook, most manufacturers remain optimistic despite the strong headwinds which have recently hit the sector such as the slowing global economy; supply chain disruptions following the Japanese tsunami; and volatile commodity markets. Manufacturing should return to growth in the third quarter, thereby supporting the UK's economic recovery.

Our forecasts suggest that manufacturing should grow by 2.8% this year, considerably more strongly than the UK economy as a whole, where growth is forecast at 1.1%. However, the economic outlook does remain uncertain and manufacturers are increasingly concerned by the growing challenges in the global economic environment.

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