Skyeast Investment Corporation

U.K. manufacturing output and orders reached record high levels in the third quarter, driven largely by export markets, a survey carried out by EEF, the manufacturers' organization and BDO LLP showed Sunday.

The latest quarterly survey revealed that output and new order balances were plus 33% and plus 35% respectively, both record levels since the survey began in 1995 which suggests growth in manufacturing output should at least continue into the next quarter. The survey was conducted between August 4 and August 25.

While, the domestic order balance weakened slightly, export market, Europe in particular turned out to be stronger than expected. Furthermore, growth continued to be broad based across all regions and sectors, the third quarter 'Manufacturing Outlook' report revealed.

The survey balance for investment turned positive in the third quarter to plus 7% for the first time since the second quarter of 2008. The latest reading signals that companies are becoming more confident to begin investing in plant and machinery. Further, the balance of companies recruiting almost doubled in the last three months to plus 17%.

"However, we have to maintain perspective that the recovery is coming from a very low base and the risks to the economy in the medium term haven't gone away," said EEF chief economist, Lee Hopley. "The rebound in exports and modest improvement in investment will need to become much more firmly entrenched if we are to see a much-needed rebalancing of the economy."

Going forward, manufacturers' expectations for future prospects remain positive and higher than the previous quarter's figure. A balance of 27% of companies forecasts output to increase in the next three months, and 22% projects orders to expand.

According to EEF, the U.K. economy will expand by 1.5% and 2.1% in 2010 and 2011 respectively. At the same time, manufacturing is forecast to grow by 3.7% in 2010 before easing back slightly to 3.2% in 2011. (Provided by RTTNews)