DISAPPOINTING MANUFACTURING FIGURES HIGHLIGHT RISKS
Reacting to today's publication by the Office for National Statistics (ONS) of Industrial and Manufacturing Output figures for January 2007, David Kern, Economic Adviser to the British Chambers of Commerce (BCC), said:
"Today's disappointing manufacturing figures for January 2007 highlight the risks still facing the sector. In spite of welcome signs of upturn in previous months, the manufacturing recovery is still very vulnerable. As we have repeatedly warned, there is a distinct danger that the cumulative effects of three interest rate increases, coupled with the more recent global financial turmoil, would damage the sector, unless corrective action is taken.
"Manufacturing output fell by 0.2% between December 2006 and January 2007, worse than expected. In the three months November 2006-January 2007, manufacturing output increased by only 0.1% compared with the previous three months, and by 2.3% compared with the same period a year ago. While historical figures for 2005 & 2006 have been revised up marginally, there has been a worrying deceleration in the pace of manufacturing growth, when compared with the position prevailing in the spring and summer of 2006. Manufacturing output has been virtually stagnant since August, and the manufacturing figures remain weak by historical standards.
David Kern concluded: "The manufacturing sector has shown so far resilience in the face of difficult circumstances. But higher interest rates and global uncertainties pose serious threats. Unless nurtured, the fragile manufacturing upturn could easily go into reverse. We urge the MPC to keep interest rates on hold for the time being. We also expect the Chancellor to use his forthcoming Budget to demonstrate his support for manufacturing and other key business areas, with particular focus on SMEs."