Food and clothing lead the way in UK manufacturing expansion

foodProd300The fastest rise in UK manufacturing production levels and new orders for more than two years pushed the bellwether Markit/CIPS Purchasing Managers’ Index (PMI) to a reading of 52.5 in June, up from 51.5 in May keeping it above the neutral mark of 50.0 for the third month running.

Domestic market conditions improved further, while demand from overseas also strengthened, helping the average PMI reading over the second quarter as a whole (51.4) post its highest since the second quarter of 2011.

The latest expansion was broad-based, with all of the industry’s sub-sectors signalling increases in June. The strongest rates of growth were recorded by the Textiles & Clothing and Food & Drink categories.

New orders rose for the fourth consecutive month in June with manufacturers reporting solid demand from domestic markets and clients based in Europe, China, North America, Scandinavia and the Middle East. A number of companies linked improved inflows of new work to strengthening confidence among clients and consumers, better weather conditions and the launch of new product lines. Nevertheless, manufacturing employment was broadly unchanged in June.

The cost of raw materials declined for the third straight month in June, reflecting lower costs for chemicals, feedstock, metals, packaging and plastics. There were reports of exchange rate factors reducing the sterling price of some imported inputs.

Average factory gate prices fell for the first time in three-and-a-half years in June, mainly due to strong competition. Lower selling prices were also linked to reduced input costs.

Rob Dobson, senior economist at survey compiler Markit said the short-term outlook for output remained “on the upside”. He continued: “Job creation is still weaker than hoped for, but this should improve if solid demand growth is sustained and eats into spare capacity.”

CIPS CEO David Noble said: “Momentum is building in manufacturing as the sector begins to work up a head of steam,” but also acknowledged that employment was “the one disappointing spot … a reminder of the anxiety that still exists in the sector. The swell in order books and increased levels of purchasing activity however, signal that the subdued labour market trend may be shortlived”.

This material is protected by copyright Ken Hurst 2013.

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About Ken Hurst

Ken Hurst began his career as a journalist in London over 30 years ago, working on a range of publications before moving on to weekly newspaper production in the newly-independent Zambia of the 1970s. He returned to the UK where his work included spells on newspapers and magazines, before moving to head up Norwich Union’s corporate affairs division. In the 1990s he moved on to freelance, co-own and publish the B2B audio magazine Sound and front the BBC radio Yesterday’s Papers programme. There followed six years as Business Editor at Britain’s biggest selling regional daily newspaper, The Eastern Daily Press, where he led an award-winning team and for whom he still writes a weekly socio/political comment column. Subsequently, he was Group Editorial Director at CBM, responsible for its UK and US magazine output – including The Manufacturer magazine – research-driven industry reports and live events content. Currently he is Contributing Editor at Works Management magazine publisher Findlay Media and Chairman of the consumer publishing house TNT Multimedia Ltd. He is a Fellow of the Royal Society of Arts and of the British Association of Communicators in Business.
This entry was posted in exports, Food & beverage, Government/statistics, Manufacturing management, sales & marketing, textiles and tagged , , , . Bookmark the permalink.

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