British manufacturers bounce back: Sector clocks up its first month of growth for nearly two years

British manufacturers have clocked up their first month of growth for nearly two years as the economy bounces back.

In another sign last year’s recession is firmly over, S&P Global said its index of activity in UK factories rose from 47.5 in February to 50.3 in March.

It was the first reading over the crucial 50 level that separates growth from decline for 20 months.

‘The long downturn in manufacturing output is over,’ said Rob Wood, chief UK economist at Pantheon Macroeconomics.

Analysts believe that cuts to taxes and interest rates will give the economy a further boost as the year goes on.

Manufacturing boost: New cars on the production line at the Nissan plant in Sunderland. S&P Global said its index of activity in UK factories rose from 47.5 in February to 50.3 in March

But with Labour well ahead in the polls, that may not be enough to save the Tories in a general election expected later in 2024. 

While the UK economy is bouncing back, the eurozone managed a score of just 46.1 as the region took another turn for the worse. 

The region was dragged down by France and Germany which recorded readings of 46.2 and 41.9 respectively.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, described the figures as ‘disheartening’.

He said: ‘The eurozone’s manufacturing sector usually runs on several cylinders, mainly the countries of Germany, France, Italy and Spain. 

Together they account for three quarters of the eurozone’s manufacturing industry. 

‘We have the unusual situation that two cylinders, Germany and France, are more or less out of action. A sustainable economic turnaround can only be expected once all cylinders are back in motion.’

Britain fell into recession at the end of last year as a decline in economic output of 0.1 per cent in the third quarter was followed by another decline of 0..3 per cent in the fourth.

Europe managed to skirt recession, however, though there was no growth across the EU in the third or fourth quarters of last year. 

In the eurozone, output fell 0.1 per cent in the third quarter but was flat in the final three months of 2023, meaning it also avoided recession. 

But while much of Europe continues to struggle – and in particular Germany – the recession in the UK is widely seen as over. 

Hailing the ‘green shoots of recovery’ in the UK, RSM economist Tom Pugh said the ‘encouraging’ manufacturing figures ‘add to evidence that last year’s recession is already over’.

He said the recession will turn to be ‘one of the smallest and shortest on record’ and went on: ‘We expect the economy to gradually pick up steam over the rest of the year as lower inflation, falling interest rates and tax cuts boost consumer spending.’

Separate figures from Nationwide showed house prices unexpectedly fell 0.2 per cent last month following a 0.7 per cent rise in February. 

But data from the Bank of England showed mortgage lending is at its highest level for 17 months in a sign confidence is returning.

This post first appeared on Dailymail.co.uk