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[LONDON] A slump in British manufacturing is showing signs of lifting thanks to higher new orders at home and the prospect of more demand from abroad spurred by the fall in the value of the pound after June's Brexit vote, a survey showed on Monday.
A stabilisation in oil prices - which could lead to more orders from the petroleum sector - helped to improve the outlook for the sector, the survey showed.
But increasing inflation pressures and a squeeze on profits meant manufacturing was still likely to contract in 2017.
"This is the most upbeat reading on the state of manufacturing we've seen for some 18 months and signals the start of brightening conditions, which had been briefly knocked off course following the referendum," Lee Hopley, EEF's chief economist, said.
Output for manufacturers picked up significantly with the balance of firms reporting growth jumping from -7 per cent in the third quarter to +13 per cent, the first time the overall balance was positive since the second quarter of 2015, EEF and BDO said.
The orders pipeline turned positive for the first time in five quarters and the improved conditions were spurring a rebound in recruitment and investment intentions.
Separately on Monday, the British government said the value of planned private and public investment in infrastructure projects had passed 500 billion pounds (S$903.3 billion) for the first time.
The projects in the pipeline included transport and homebuilding projects and broadband improvements that were outlined by finance minister Philip Hammond on Nov 23 when he announced Britain's first budget plans since the June referendum decision to leave the European Union.
Mr Hammond hopes higher levels of investment in British infrastructure will help the economy to cope with its divorce from the EU.