North manufacturers buck trend of gloom
MANUFACTURING levels in the North-east paint a “buoyant picture”, despite reports of easing activity levels in the sector, an industry expert said today.
Alan Hall, Northern director of manufacturers’ organisation EEF, said he was not expecting a downturn in manufacturing in the region in “any major way,” and calls for a cut in interest rates were premature.
Expectations of an early cut were fuelled after figures showed activity levels in the manufacturing sector fell last month. They were heightened again yesterday by reports of a credit freeze, which may force the Bank of England’s hand in February.
The Chartered Institute of Purchasing and Supply (Cips) said recent gains made by the sector were reversed in December as firms battled the effects of the credit crunch and higher costs, and new orders also dropped to a 21-month low, reflecting weaker domestic and foreign demand.
But Mr Hall called on the Bank of England to balance any decision on interest rates against the high level of inflation.
He said: “Just based on the intelligence we had available to us before the Christmas break, we can still see a buoyant picture for manufacturing. There is still evidence of inflation in the system and I would be surprised if interest rates were cut as early as January.
“A cut in February would be more in line with our expectations and that won’t be a problem to the manufacturing sector in this region.”
Howard Archer, chief UK economist at Global Insight, said a 0.25% reduction to 5.25% could come at next week’s meeting of the Bank of England’s Monetary Policy Committee (MPC).
