Factory output is soaring

Britain showed further signs of economic recovery today after factory output hit its highest level for nearly two years.

The Chartered Institute of Purchasing and Supply said its headline index of activity for manufacturers, where a score over 50 marks growth, hit 53.7 in October.

It was the highest level since November 2007 and up from 49.9 in September in the third-biggest monthly rise on record.

CIPS chief executive David Noble said: "It appears that the manufacturing sector has turned a corner and is starting to pull itself out of recession."

However, he warned manufacturers remained "highly vulnerable" and added: "The sector has been so hard hit since the recession began that it will be a long time before it returns to its previous level." Exports rose for the third successive month helped by a weak pound, but staffing levels in the sector fell for the 18th month in a row.

Jeegar Kakkad, senior economist at the EEF manufacturers organisation, warned of the potential danger ahead next year.

"We still can't take a strong, sustainable recovery for granted," he said. "The fourth quarter was always going to be better than the rest of the year and with fiscal stimulus set to be withdrawn in January, the dangers of a double dip are still very real."

Jonathan Loynes of Capital Economics said: "The industrial recovery remains on track and provided some early hope that the UK economy will finally emerge from recession."