Economic recovery continues with strong manufacturing

While the indicators point to a strong manufacturing sector, performance in the service sector is weaker, raising concerns about a sustainable recovery. In summary, the QES (full report at the weblink below) identifies the following trends: Economic climate • The QES results indicate that the UK economy has continued to expand in Q4 2010. But, in spite of strong manufacturing and improved export balances in both sectors, GDP growth has probably slowed in Q4 (relative to Q3) because of the inadequate performance of the service sector. • Manufacturing will help to rebalance the UK economy, but persistent problems in the Eurozone cause serious difficulties for UK exporters. Business confidence • The QES figures suggest that manufacturers are still confident of increasing their expected turnover and profitability in 2011. • Similarly, both measures for the service sector are up, though they suggest firms in the sector are not as confident as earlier in 2010. UK exports • In both manufacturing and services, the exporting figures signal an increase in both overseas sales and orders during the last quarter. • In the manufacturing sector, the results reached their strongest level since Q4 1994. • The service sector figures suggest exports returning to levels not seen since before the recession in 2007. Employment • Figures for the last three months suggest manufacturing firms have expanded their workforce, but this is not the case for services where figures have remained static.