Bounceback in manufacturing does not signal a rapid recovery - Ernst & Young - United Kingdom

• After the surprisingly weak August industrial production data, it was very likely that there would be some sort of bounceback.
• Output is still below July levels.
• Bumpy and protracted recovery in prospect.

"After the surprisingly weak August industrial production data, it was very likely that there would be some sort of bounceback; there was anecdotal evidence that firms had instituted longer than usual August shutdowns.

"While manufacturing output rose 1.7% on the month in September, the July and August growth rates were revised down, and so are roughly in line with the preliminary GDP estimate. Any revisions to GDP are likely to come from the services sector, which accounts for a much larger share of the economy, and where the ONS had made some conservative estimates about September.

"Ignoring the volatility of the past couple of months, output is still below July levels. This paints a different picture from the rosier PMI survey data which has been pointing to increases in output since June.

"Although the ONS data may be underestimating the strength of the manufacturing sector, support from short term factors such as the turning of the stock cycle and the car scrappage scheme will wear off within a few months - a bumpy and protracted recovery thereafter is in prospect."