Finance

Some positive news on UK manufacturing output today - but Diageo still sounds pretty gloomy...

After yesterday’s depressing GDP data, today saw more encouraging stats from the UK manufacturing sector: for the first time in 15 months, production actually rose, while the decline in new orders continued to slow. Both figures suggest that the sector may finally be starting to come out of recession, or at least that its slump is levelling off. But on a day when Diageo announced plans to cut 900 jobs in Scotland, it’s clear that we’ve got a long way to go yet…
   

The Chartered Institute of Purchasing and Supply’s Purchasing Managers’ Index, the most highly-regarded health-check of the UK manufacturing sector, rose to 47.0 in May. This was the fourth consecutive monthly rise, and takes the Index to its highest level since last May. And although orders are still falling, output increased for the first time in 15 months, suggesting that manufacturers have run down their inventories and now have enough demand to start producing again. ‘After months of doom and gloom, there are some signs of relief,’ said CIPS boss David Noble.

But we probably shouldn’t get too excited. For a 15th consecutive month, the PMI index remains below 50, the figure that separates recession from growth – that’s the longest period since records began. And manufacturers clearly don’t think they’re out of the woods yet. This morning, Diageo announced that it’s closing a distillery and a packaging plant in Scotland, with the loss of 900 jobs (although some of these unfortunates will be redeployed at another site, so the net figure will be more like 500). The drinks giant is looking to cut costs, and apparently thinks this will save it about £40m. Similar cuts in Ireland may follow.

More positive job market news came from British Gas, which is planning to install smart meters (devices that can be used to monitor our energy use remotely and promote energy conservation) in every home in the UK by 2012. British Gas said today that installing these 26m smart meters would create 2,600 new jobs – to include some 900 redeployed meter readers, plus another 1,700 brand new positions (mostly practitioners, but also managerial and support staff). Then again, it seems likely that some meter readers and call centre staff will end up out of a job as a result, so the net figure is unlikely to be this high.

So all in all, the picture remains decidedly mixed...

In today's bulletin:
National Express reeling as East Coast mainline nationalised
Tesco to bid for Northern Rock?
Rose lives to fight another day as M&S shows signs of life
Industry recovering - but Diageo cuts 900 jobs
'35 Under 35' in focus: The engineers are coming