British Manufacturing Growth continues to boost UK Economy

Chancellor George Osbourne recently announced new measures to help manufacturers in a bid to 'rebalance' the UK economy. According to reports, things certainly seem to be moving in the right direction for British industry.

Industry remains a vital cog in the UK's continuing recovery

The Office for National Statistics (ONS) has reported that UK manufacturing output grew by 1% in February from January - 3.8% higher than in the same month of 2013. The biggest rise since September beat all forecasts and was sparked in large part by pharmaceuticals, transport equipment, food, beverages and tobacco.

Industrial output, including North Sea oil production and power generation, also rocketed 0.9% on the month. That was up 2.7% compared to the previous year and compensated for a drab January hampered by bad weather. According to the ONS that quarter to the end of February saw manufacturing and industrial production both leap 0.8% on the previous three months.

"Output now stands at its highest level in more than two-and-a-half years, with companies reporting good trading conditions, both at home and in overseas markets, Lee Hopley, chief economist at the EEF, the manufacturers' organisation told the BBC.

"All manufacturing indicators are lining up for a strong first-quarter growth rate, highlighting that industry remains a vital cog in the UK's continuing recovery," he added.

The pound, IMF forecasts and salaries show upward trend

The stronger than expected output figures caused the value of the pound to surge and prompted the International Monetary Fund to escalate the country's growth forecasts more any other major economy.

Reuters reported, “For the second time in six months, the Fund sharply raised its forecasts for British growth, which it now sees hitting 2.9 percent in 2014 before easing to 2.5 percent next year. That was up from previous forecasts of 2.4 and 2.2 percent.”

A survey by the British Chambers of Commerce (BCC) also showed that six key manufacturing balances had hit an all-time high, including record exports. And another BCC poll suggested British employers are raising salaries for new permanent staff at the fastest rate in seven years to help fill vacancies.

Vince Cable announces £100 million of funding to support reshoring

Meanwhile, in another boost for UK manufacturing, Business Secretary Vince Cable announced £100 million of funding to support reshoring and safeguard thousands of jobs. Mr Cable told delegates at MACH, the manufacturing technology showcase at the NEC in Birmingham, that a strong manufacturing sector was vital to economic recovery.

He said, “Our industrial strategy, which has given business the confidence to invest, is paying dividends in the reshoring we have seen so far. We will continue to support businesses to secure more highly skilled jobs and a stronger economy,” it was reported by The Manufacturer.

Terry Scuoler, Chief Executive at EEF, told the industry magazine, “This is another welcome boost for British manufacturing, which will have a positive impact on the wider economy. Our own research shows that in the last three years, one in six companies have re-shored production back to the UK with many turning to a UK-based supply chain for parts and components.”

The manufacturing sector supports 2.5 million jobs and contributes nearly £140 billion a year to the UK economy.