City wary over factory fillip

Jane Padgham12 April 2012

BRITAIN'S manufacturing sector enjoyed its first back-to-back monthly expansion since October 2000 in May, latest figures show. But economists warned the apparent recovery could be a false dawn.

Factory output rose by 0.7% during the month, much more than the 0.1% the City had pencilled in, and followed April's 1.1% increase. On a year-on-year basis, output was 2.6% lower compared with 4.3% in April.

However, National Statistics said the moving of the Bank Holiday from the end of May to June to coincide with the Jubilee celebrations was likely to have helped the figures.

More-up-to-date survey evidence has suggested the manufacturing bounceback stalled in June and demand is back to the sluggish average of the past 26 months. Nevertheless, the pound hit a fresh 26- month high against the dollar of 1.5530. The euro rose to 99.69 US cents before retreating to 99.25.

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