Influential new data suggests that UK manufacturing is at least showing signs of stabilising after a rocky few months. While remaining just below the neutral 50.0 mark, the Markit/CIPS Purchasing Managers’ Index (PMI), a well-regarded bellwether of the sector’s health, rose to 49.8 in April, from 48.6 in March.
The data showed levels of production and new orders rising slightly after contracting in February and March. The modest recovery reflected a mild gain in new contracts with most growth coming from the consumer and investment goods sectors.
Manufacturers also benefited from a modest improvement in new export orders with sales increasing to clients in North America, the Middle East, Latin America and Australia but remaining lacklustre in the Eurozone.
Input inflation dipped with companies paying less for commodities and fuel although the cost of chemicals, food products and plastics rose and a weak pound put up the price of imports.
Manufacturing job losses were recorded for the third straight month in April, although the rate was weaker than in the previous two months.
Rob Dobson, senior economist at survey compilers Markit said the stabilisation meant the sector should be less of a drag on broader economic growth.
CIPS CEO David Noble believed that “a march of the makers may be on its way”. However, he warned: “We should not forget that the sector is not in rude health … but the latest figures are at least a chink of light in the tunnel”.
EEFchief economist Lee Hopley said the PMI improvement was “mildly encouraging” with the improvement in exports being “especially positive as the UK sorely needs an improvement in trade if we are to make faster progress on rebalancing growth”.
This material is protected by copyright Ken Hurst 2012.