-Terry Scuoler, chief executive of the EEF, a manufacturing group
Britain's factory index rocketed to a 14-month high last month, boosted by the increase in new orders, adding to signs the economic recovery is gaining strength. A gauge of manufacturing activity jumped to 51.3 in May, up from a revised 50.2 in the prior month, climbing above the 50 threshold and exceeding analysts' expectations of a 50.3 reading. During the first three months of 2013 factory output contracted 0.3% and has been a drag on growth last year. However, signs that the manufacturing sector is recovering are adding further weight to the BoE's decision to keep interest rates and the pace of bond-buying programme on hold. During its policy meeting on Thursday the Bank of England is widely expected to refrain from more actions amid signs of economic recovery.
The British Chambers of Commerce raised its economic outlook through 2015 last week, and separate data showed that consumer confidence surged to a six-month high in May. Manufacturing sector accounts for around 10% of economic output, but it punches above its weight as it is tend to have positive effect on services. Nevertheless, risks for a sustainable recovery are high as retail sales fell the most in 16 months in May, while the unemployment rate rose in the first quarter.
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