Orders rise but industry signal is mixed

BRITAIN'S manufacturers saw an increase in new orders in June for the first time in three months.

But with current factory output still down, the picture from the influential Purchasing Managers Index will send a mixed signal to the Bank of England's monetary policy committee, which meets next week to consider interest rates.

The PMI index, which measures actual activity rather than confidence, rose to 49.6 from 48.7 in May, a higher jump than expected. This suggests only a slight level of overall contraction in manufacturing. Anything over 50 shows growth.

The seasonally-adjusted New Orders Index posted a reading of 50.8, a huge improvement on May, when the index showed new business fell during the election month at the fastest rate for three-and-a-half years.

Orders from domestic and overseas customers rose in June with new export orders up for the first time in six months. UK manufacturers said they were winning new business in North America and Europe, with encouraging interest in East Asia, especially China.

Strong competition led to factory gate prices sinking further as companies fought to win new clients and keep existing ones.

Government statistics released today showed that business investment - a key barometer of confidence - was up by 0.1% in the first quarter but the overall level of investment was revised down.