MEDWAY'S manufacturing and engineering industry will continue to struggle for some time--but there could be a glimmer of hope on the horizon.

That was the mixed message from Jeremy Peat, chief economist with The Royal Bank of Scotland, when he visited The Roffen Club in Rochester. These sectors showed considerable weakness, he said, with the imminent closure of Sheerness steel mill only underlining the difficulties.

"I have to accept that for parts of the Medway Towns we still have cause for concern about what's happening on the manufacturing side," he said.

Mr Peat, who grew up in Kent, said there was a two-speed economy, with manufacturing stagnating and consumers spending like there was no tomorrow.

But it was not all gloom for Medway manufacturing. There were hopeful signs that the United States economy would recover in the first or second quarter next year, and that would boost demand for UK manufactured goods.

"Look for 2003 being a much better time for manufacturers and exporters than they've seen for a couple of years," he said. "They're not out of the wood--they will see ups and downs over the next few months but provided the US maintains its growth, the global economy will be much stronger through next year."

Mr Peat was in Rochester to attend a dinner hosted by Medway Chamber of Commerce and sponsored by the Royal Bank of Scotland.

Graeme Jones, RBS manager for Maidstone and Medway, accompanied Mr Peat at the dinner, and a second speaking event in Tunbridge Wells the following day.

Mr Jones said: "Medway has a good solid base and while having some difficulties, is well placed to take advantage of the upturn in the economy."