Export sales from manufacturing firms have risen to a balance of 23 per cent, the best level for a year

Manufacturing export rise boosts growth hopes

Signs of economic growth continued today after a survey showed rising exports from manufacturing firms in the second quarter.

Export sales from manufacturing firms rose to a balance of 23 per cent, the best level for a year, the British Chambers of Commerce's (BCC) quarterly economic survey showed,

And domestic sales also improved, with manufacturers reporting a balance of 16 per cent, the best for two years and though manufacturers' export orders were unchanged at 22 per cent, this is still the best level for a year.

Firms took on more workers, with an employment balance of 19 per cent, and manufacturing confidence in turnover growth rose to 51 per cent prompting the balance of manufacturing firms looking to increase investment to rise nine points to 23 per cent.

However, the survey follows official figures showing a fall in lending to businesses in May. Loans to non-financial firms fell by £1.3bn in May, including a £452m drop in lending to small and medium-sized companies, the Bank of England said yesterday.

John Longworth, director general of the BCC, said: "British firms are doing their utmost to drive recovery. The sheer strength of our export balances shows that companies have untapped potential to expand.

"Recovery will only be turbo-charged if we can create a truly enterprise-friendly economy here in the UK. That, in turn, requires swift delivery of the infrastructure boost promised in the spending review, more support for exporters seeking to enter new markets, far more action on finance for growing companies, and a relentless government commitment to enabling the private sector to generate wealth and prosperity."

The survey, which quizzed more than 7,400 services and manufacturing businesses in May and June, also found export sales from the dominant services sector rose to a balance of 36 per cent, the highest level since the survey started in 1989.

Services firms also reported rising domestic deliveries with a balance of 20 per cent – the highest level since late 2007 - and the BCC said the figures could point to GDP growth of up to 0.6 per cent between April and June, following 0.3 per cent expansion in the first three months of the year.

David Kern, BCC chief economist, said the figures show the UK economy is "slowly strengthening".

He said: "If recent progress is sustained, we could even see quarterly GDP growth of 0.6 per cent in the second quarter. The remarkable export balances show that the services sector is capable of increasing its trade surplus over time and can work to reduce our overall trade deficit. Developing the export potential of this sector is critical to long-term prosperity."

Another survey of 150 senior managers released today found that thousands of jobs could be created in the coming years as a third said they aimed to switch from overseas to UK supplies, partly because of rising costs and easier transport and logistics.

The trend meant that the UK was becoming more attractive for manufacturers, according to the report by Business Birmingham.

Investment Director Wouter Schuitemaker says: "Re-shoring can help us rebalance our economy, create new jobs and cut our trade deficit. It's vital that we back our manufacturers and pull out all the stops to support those who are bringing manufacturing home.

"We need to make sure that businesses along the supply chain are not burdened by regulations such as those around visas, and are not disadvantaged by high energy costs."

Lee Hopley, chief economist at EEF, the manufacturers' organisation, says: "We are hearing more reports of companies looking to source materials and other services in the UK. This is another sign of industry's growth potential and builds on the latest positive indicators.

"There are many reasons for a shift back to Britain, including improving the security of supply chains, the focus on innovation and quality and the rise in employment and transport costs in emerging economies."

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