Industry boost as hi-tech tide turns

A BOUNCE in computer production in July triggered the biggest increase in factory output since last November.

Today's official figures, on the back of several upbeat industry surveys in recent weeks, will add to hopes that the battered manufacturing sector is finally emerging from recession. It also backs growing evidence the economy is on the road to recovery.

Manufacturing output rose 0.5%, with the electrical and optical equipment sectors, including computers, accounting for 80% of the increase. Still output is 0.3% lower than a year ago.

Ciaran Barr, chief UK economist at Deutsche Bank, said: 'We'd be churlish not to admit there has been a turnaround in manufacturing. However, it's early days yet and manufacturing remains vulnerable.'

Alan Castle at Lehman Brothers said the figures meant third-quarter gross domestic product growth could come in at a punchy 0.6% to 0.7%.

A separate report showed manufacturers' profit margins are still being squeezed. Output prices rose 0.2% in August while input prices, swollen by a 6% increase in oil prices during the months, rose 1.1%.