UK Treasury hails manufacturing growth

LONDON - Sharp rises in manufacturing output and overall productivity combined to offset stagnation in the services sector, new figures have shown.

The figures were greeted in the City as a fresh pointer towards a hike in interest rates, while Britain's Treasury hailed them as support for its optimistic economic forecasts.

Factories in the UK posted their strongest month in two years in June while recent revisions to growth showed worker efficiency in a better light.

Ed Balls, the Economic Secretary to the Treasury and Gordon Brown's right-hand man, hailed the figures as evidence of "unprecedented" growth and stability.

The Chartered Institute of Purchasing and Supply (Cips) said factory output grew at the quickest rate since July 2004 as demand at home and abroad strengthened.

Its index of activity rose to 55.1 per cent in June on a scale where a number over 50 denotes expansion.

Firms took on more staff for only the second time in 15 months.

"The recovery of manufacturing was unremitting this month amidst reports of robust growth," said Roy Ayliffe, a director at Cips.

- INDEPENDENT