Manufacturing gains, but economy fragile

The latest figures from the British Chambers of Commerce (BCC) Economic Survey reveal that, although on the brink of leaving recession, the economy during 2010 will remain fragile. But manufacturers, in particular, are feeling more confident.

Manufacturing companies reported their most positive quarter for home sales since Q1 2008 and for exports since Q2 2008.

Nevertheless, manufacturers were far less confident about investment and the likelihood of creating employment, suggesting these businesses, like many are keep a very tight rein on expenditure.

The service sector performed worse than manufacturing on all measures in the BCC survey, including domestic market sales and orders, employment and investment.

David Frost, director-general of the BCC commented:

Businesses are showing resilience despite difficult and uncertain trading conditions. Confidence is improving, and the boost in exports must be nurtured in order to strengthen Britain’s trade position globally, and to help rebalance the economy away from an over-reliance on the public sector.

Positive signs are definitely present, but many are still concerned that green shoots may be stunted by the early frost of a double-dip recession.

David Kern, chief economist at the BCC, is one of those and points out that:

With current pressures on capacity modest, and price pressures muted, the Monetary Policy Committee can afford to maintain an expansionary stance, so as to reduce the risk of a double-dip recession.

Looks like we won’t be seeing the end of the Bank of England’s welcomed, quantitative easing any time soon.

[Picture credit: James Cridland licenced from Flickr]