At this rate everyone can still be happy

Finally, the government's figures have confirmed what business surveys have been saying since the turn of the year: things are looking up for British industry.

The chunky rise in April's industrial production figures was the result of a broad-based recovery, led by those sectors which suffered most from last year's downturn: computers, semiconductors and mobile phones. Setting aside yesterday's euro-blip, sterling's lower value against the single currency should provide a further boost over the coming months.

Factory output for previous months has been revised up too, which should allow the statisticians to correct their controversial initial judgment that the economy stood still for the first three months of the year.

With industry apparently back on its albeit shaky feet, the hawks on the Bank of England's monetary policy committee will no doubt be making the case for a rate rise at next month's meeting.

The Bank's quarterly inflation assessment showed the underlying rate of price growth overshooting the government's 2.5% target in two years' time and, while the MPC insists there is no mechanical link between the Bank's forecasts and its rate decision, there is no doubt that some members of the committee are itching to increase borrowing costs.

Of the five leading central banks which target inflation, ours is the only one yet to respond to gathering evidence of an upturn with a rate rise.

It's not yet time for the doves to concede the argument, even without the super-soft Sushil Wadhwani. The deval uation of sterling will not necessarily stoke inflation if consumers choose to abandon the shops rather than stomach higher prices - which soft spending figures this week suggested they may already be doing.

Manufacturing is recovering from a woefully weak base and, without the mighty consumer, it is not clear where the economy would find its momentum.

In the US, Alan Greenspan looks in no hurry to turn off the consumer engine by tightening policy, despite an upturn in growth and a downturn in the dollar.

Trigger-happy hawks over here would be wise to follow his example.

Mobile stability


In a physical sense, market meltdowns can only go so far - even in the molten telecoms and technology sectors. Yesterday there was a bit more evidence that for the strongest companies the worst may be over.

Sure, corporate flops such as Energis and Marconi are due to be be reclassified as "small cap" firms by the FTSE index actuaries after the market's close today- investors having already reclassified these companies as penny dreadfuls.

But look at Vodafone, which bobbed above 100p a share again yesterday. And (by way of explanation), look at Nokia, which yesterday cut it sales forecast and subsequently watched its stock price first crash by almost 10% and then soar, closing more than 6% higher on the day.

The switchback was caused by a realisation that, while expected growth in the sale of handsets during the current quarter had been cut from a 5-10% range to 0-4% at best, the Finnish company has nevertheless promised to maintain its forecast earnings growth, which could come in at 20 cents a share this year.

Nokia may have been damaged by disappointing sales of its high-end handsets but it seems to have become increasingly efficient at manufacturing mid- and lower-end phones. So overall margins of more than 20% in the handset business should be maintained.

Shares in Nokia had already halved in price this year, and a bit of a rally on not-too-disappointing news on the trading front was probably to be expected. But the underlying message from the markets was that big investors are still ready to listen to well financed telecoms companies that can demonstrate strong management in difficult times.

Of course, that doesn't mean consumers will necessarily jump at Nokia's new picture gizmo handsets (which include a little camera). And for Vodafone 3G network technology looks as big a gamble as it did last month.

Investors will remain leery of companies which are still priced on the expectation of exceptional growth, but, for now at least, market sentiment appears to be stabilising.

In at a Cantor


Many of the City's top analysts were on parade for the annual Thomson Extel pan-European survey lunch in London yesterday. The survey is one of those where anyone who gets a mention can probably touch their investment banking management for an immediate pay rise, so there was much poring over the small print once the full results had been handed out- sensibly, after the official festivities.

One intriguing question is how many of the analysts could boast the same track record as the employee at financial betting shop Cantor Index, who set the odds for the likely winners and losers for three of the main categories.

He or she saw two favourites canter in first, while the hot tip in the third came in second, so to speak.

Time for a pay rise? Or maybe a stewards' inquiry.