There are some signs that the recent stagnation in manufacturing output won’t last long. The Markit manufacturing PMI rose to a seven-month high in December and, although the headline index of the ISM survey fell in November, the rise in the production index is consistent with a rebound in output. The recent pick-up in overseas demand therefore appears to be boosting activity. That said, we doubt that the global economy will be strong enough next year to support a decent industrial recovery. Other sectors, such as housing, will contribute more to the modest 2% increase in GDP that we expect next year.
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