BCC: UK upturn is gathering momentum

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UK companies saw sales and optimism jump in the third quarter, according to the British Chambers of Commerce (BCC).

Service firms saw UK sales and orders rise at the fastest pace since 2007, while the rises for manufacturing were the sharpest since the early 1990s.

"It's clear that the UK upturn is gathering momentum," said David Kern, BCC chief economist.

But a British Retail Consortium survey showed UK retail sales slowed for a second consecutive month in September.

"These figures are a reality check and will make retailers nervous as we enter the run up to Christmas," said David McCorquodale, head of retail at KPMG, which helped compile the BRC data.

Jobs growth

The British Chambers of Commerce said the results of its quarterly survey mean that it was likely to revise up its GDP forecasts for 2014.

The quarterly survey is based based on responses from 7,400 companies, making it the UK's largest business survey.

On the basis of the results, the BCC estimates that GDP growth will be in the region of 0.9% and 1% in the third quarter.

The survey reported that employment prospects are brighter. A balance of 26% of services firms planned to increase staffing in the next three months, the highest reading since 2007.

For manufacturing, the reading was 29%, the highest since the survey began in 1989.

The BCC's director general, John Longworth, said in a statement: "It is fantastic to see our small yet dynamic manufacturing sector doing so well, with our results suggesting a recent growth spurt.

"However, we need to ensure that this does not become an aberration, but rather the norm, particularly when the economic recovery is still facing external risks."

He said that levels of investment were still a concern, and that more support was needed for exporters through increased trade promotion and better access to finance.

"The Government mustn't get distracted, and has to put growth first at all times," Mr Longworth said.

"We will be looking ahead to the Autumn Statement in the hope that the chancellor uses this opportunity to make a real difference and go all out in the name of growth," he said.

'Cautious consumers'

Meanwhile, the BRC data showed that like-for-like sales - which strip out changes in floor space as retailers open and close outlets - rose 0.7% in September. This was less than half the rate of growth of the previous two months.

Grocery sales showed a weak performance in September, although sales of children's clothing and shoes put in a strong showing, due to the tail-end of the traditional back-to-school spending spree.

The BRC said that a slowdown in food and drink sales reflected the tough battleground for market share. And the warm weather had also put people off spending on winter clothes.

"Consumers are still cautious about spending and are reluctant to restock their wardrobes with winter woollies until the weather cools," Mr McCorquodale said in a statement.

The survey underlines that some sectors remain weak, despite a recent run of strong economic data.

Some of Britain's biggest retailers, including Morrisons and Next, remain cautious about the strength of the UK recovery.

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