The September reporting season has provided an upbeat snapshot of the fortunes of the UK industrial sector.

The majority of such companies announcing results in the last four weeks have posted positive numbers, supported by upbeat assessments of future prospects.

Generally analysts have spent the month upgrading profit expectations for the full year.

The US remains the primary growth engine. Despite cautionary warnings for the economic outlook, order books are not yet reflecting the uncertainty.

Meanwhile, the Far East, driven by China, and even Europe has traded well in the first six months of this year.

Raw material price inflation is generally easing, albeit marginally, but large variances remain across the sector as to the extent manufacturers can pass on those increases.

Energy cost inflation persists though gas/electricity prices have softened lately, coinciding with the fall in oil price to a six-month low around $60 per barrel. As ever, there will be a lag before the full benefit feeds through to wholesale prices as a majority of firms have long-term fixed price agreements in place.

More aggressive upgrades in September were limited only by the recent softening in the dollar, partly caused by mounting expectation of further tightening of monetary policy in the UK. The dollar has again tested the $1.90 level. In comparison, the average rate during the final six months of 2005 was $1.77. We believe that most industrials have assumed a second half rate of $1.90 or below for their budgets.

The industrials sector has gained ten per cent this year, reflecting the upgrade cycle and favourable trading environment. Subject to no further weakening of the dollar we believe there is scope for further upgrades over the next six months and expect further share price gains.

At first glance, the performance of many industrial companies year-to-date offers slim pickings for "true value", but those stocks currently trading on premium ratings are typically high quality stocks, with above-average growth prospects going forward.

Those stocks with ratings that we believe offer value on current ratings include Charter, Foseco, Carclo and Aga. Continued private equity interest in the sector also serves to underpin valuations.

Turning to the tables, Midlands-based firms recorded a strong performance during the month of August against the wider UK market.

Witness regional heavyweights including GKN (+17.5 per cent) and the brewers Mitchells & Butler and Wolverhampton & Dudley (up 5.7 per cent and 4.3 per cent respectively) pushed the Shareleague companies 3.5 per cent higher on the month, on a market capitalisation weighted basis, versus a flat FTSE All-Share index.

Dignity, the Sutton Coldfield-based funeral services provider pushed Severn Trent down to second place after another solid performance, up 4.8 per cent in August. Mitchells & Butler took third position.

News flow featured more prominently further down the table as GKN climbed six places in the month, advancing from the foot to 12th spot after revealing impressive interim results in which operating profits more than doubled from £57 million to £129 million. Moving in the opposite direction was Hampson Industries.

Despite an upbeat AGM statement at the end of the month the aerospace and turbo charger components manufacturer now props up the Super table having lost nine per cent in August.

There was even less movement at the top of the Share-league Plus table.

Business Post retained pole position despite losing almost three per cent in the month. Staffordshire-based Dechra Pharmaceutical climbed one place to number two, forcing commercial property developer A & J Mucklow into third place. Foseco was the star performer in the month, adding almost ten per cent to climb back to April's starting level, enough to secure fourth position.

The Islamic Bank of Britain remains rooted to the base of the table, falling another 19 per cent in August. The Sharia's compliant bank has virtually halved since the start of this year's Shareleague competition in April.

Coventry-based, black cab manufacturer, Manganese Bronze climbed one place moving into second spot in the Shareleague table. An impressive rise of 37.8 per cent in August was not enough to dislodge Andrew Sykes for the top spot.

The widely anticipated bid for Aston Villa by American billionaire Randy Lerner pushed the shares 7.5 per cent higher in the month and was enough to prevent Baggeridge Brick claiming third position despite rising over 20 per cent in the month. The recommended all cash offer at 547p per share, valued the football club at £63 million.