U.K. Manufacturing Improves as Jobs Outlook Brightens, BCC Says

U.K. factories saw domestic and export demand strengthen in the third quarter and expect to accelerate hiring in the next three months, according to the the British Chamber of Commerce.

Measures of manufacturers’ export sales and orders rose to the highest since the fourth quarter of 2010, the BCC said in a report published in London today. An index of domestic sales in the quarter increased, while companies’ employment expectations advanced to a record.

The report, which also showed an improving jobs outlook in the services industry, may reinforce the view that the economic recovery will continue to strengthen. BCC Chief Economist David Kern said third-quarter growth may have accelerated to as fast as 1 percent from 0.7 percent in the previous three months and he expects to raise his full-year forecast.

“It’s clear that the U.K. upturn is gathering momentum,” Kern said in a statement. “Growth will continue, but it is likely to slow slightly following this recent spurt. External shocks from the U.S. shutdown, possible debt default and tapering, and continued risks elsewhere in the world could all impact on our fragile recovery.”

The index of manufacturers’ export sales rose 12 points from the second quarter to 35 and export orders climbed 11 points to 33, the BCC said. A gauge of domestic sales surged 22 points to 38 and employment expectations rose 9 points to 29.

“Confidence in the manufacturing sector has fueled a temporary growth spurt, but it is too early to declare that the recovery is now secure,” the BCC said.

An index of domestic orders at services companies rose to the highest since 1994 in the third quarter. The outlook for hiring in the services industry brightened, with a measure of employment intentions advancing 4 points to 26, the highest since 2007. That’s still lower than the level before the recession, according to the BCC.

Within services, the export sales index slipped 2 points to 34 and the export orders gauge declined 1 point to 28.

To contact the reporter on this story: Eshe Nelson in London at enelson32@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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