Manufacturers show solid growth in Q2

LONDON (Reuters) - Manufacturing output and orders rose in the second quarter of 2008 in a sign the sector is not suffering unduly from the economic slowdown caused by the global credit crunch, a survey showed on Monday.

The Engineering Employers Federation's quarterly report paints a markedly different picture from downbeat surveys from the Confederation of British Industry and CIPS.

The EEF survey's total orders balance rose to +16 from +15 in Q1 while the domestic new orders index climbed to +4 from +2.

"Manufacturers are providing a beacon of light amidst the current economic gloom and remain cautiously optimistic about their immediate prospects," said EEF chief economist Steve Radley.

But policymakers are likely to be dismayed that where the EEF report does chime with other surveys is in showing that price pressures are still rising.

The balance for the average price of domestic orders rose to +18 from +6. That was the highest since the series began in 2001. The balance for export orders prices rose to +12 from +4, also the highest since 2001.

But the survey also showed that manufacturers were having their margins squeezed, as they could not fully pass on their rising costs.