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Strong start to 2007 for manufacturers

Date 5 Mar 2007

Britain’s manufacturers have carried on this year where they left off 2006 to post a strong first quarter, according to one of the leading barometers of the sector published last week by EEF, the manufacturers’ organisation.

EEF used the figures to stress that stronger growth can be combined with cost control; allaying some fears at the Bank of England that improved order books for manufacturers are leading them to push through price increases. The number of firms reporting price increases remains low, while separate EEF research demonstrated no evidence of increased inflation generating higher wage rises in the sector.

Alan Hall, EEF Northern Director said: “Manufacturers are taking the effects of a strong currency in their stride and are continuing to post strong figures on the back of strong world markets, improving productivity and investment in innovation. “However, despite enjoying healthy order books, few manufacturers are able to raise prices. This shows that manufacturing can continue to enjoy healthy growth without the need to raise interest rates to clamp down on inflationary pressures.”

Looking forward, companies reported the highest level of confidence since the third quarter of 2004 indicating that momentum should be maintained during the first half of this year. Firms forecast export orders continuing to improve although there is also greater optimism for domestic order books on the back of a healthy UK economy.

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