Bloomberg News

U.K. Factory Output Grew in Second Quarter on Exports, EEF Says

June 05, 2011

June 6 (Bloomberg) -- U.K. factory production strengthened in the second quarter as companies benefited from increasing export orders, the Engineering Employers Federation said.

A measure of output rose to 28 from 25 in the first three months of the year, the EEF, a lobby for manufacturers, and BDO Stoy Hayward LLP said in a report released today in London. A gauge of new export orders increased to 28 from 25.

The pound’s drop of about 25 percent on a trade-weighted basis since the start of 2007 has bolstered manufacturers by stoking demand for exports. Still, with manufacturing accounting for just 13 percent of the economy and domestic demand sluggish, the Bank of England will probably leave its key interest rate at a record low of 0.5 percent this week to support the recovery.

“Our survey continues to show underlying strength in output and orders,” Lee Hopley, chief economist at the EEF, said in an e-mailed statement. “Providing buoyant demand from overseas markets holds firm, we should see growth maintained through the rest of the year.”

The EEF’s measures of average prices for domestic and export orders both fell to 16 from 26. A gauge of employment slipped to 24 from 29.

Two other reports today also suggest the labor-market outlook remains uncertain. Lloyds TSB’s consumer barometer showed a measure of job security weakened to minus 21 in May from minus 18 in April. A report by employment website showed a measure of job opportunities fell 4 points in May to 121, the lowest since January. The gauge is based on listings on the website’s job board.

The EEF report contrasts with a survey of purchasing manufacturers published last week by the Chartered Institute of Purchasing and Supply that showed manufacturing grew at the slowest pace in almost two years in May. A separate survey from CIPS showed expansion in service businesses such as banks and airlines slowed.

All 55 economists in a Bloomberg survey see no change in the bank’s key rate at its June 9 decision. All 35 respondents in a separate poll say policy makers will also hold their bond- purchase program at 200 billion pounds.

--Editors: Fergal O’Brien, Jeffrey Donovan

To contact the reporter on this story: Jennifer Ryan in London at

To contact the editor responsible for this story: Craig Stirling at

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