The Markit/CIPS Purchasing Manager’s Index (PMI), a respected bellwether of the sector’s wellbeing, posted 57.3 in December, down slightly from November’s 33-month high of 58.1, “but still a level indicative of a robust improvement in overall operating conditions” and well ahead of its ‘neutral’ 50.0 mark.
December saw rates of expansion in production and new orders both remain among the highest in the 22-year survey history, leading to a pace of job creation close to November’s two-and-a-half year record. Companies benefited from strengthening domestic market conditions and a solid bounce in incoming new export orders.
The level of new export business increased for the ninth consecutive month in December. However, the rate of growth eased to the weakest since September. UK manufacturers reported improved demand from Brazil, China, Ireland, Russia and the USA.
December data signalled an eighth successive monthly increase in manufacturing employment. The rate of jobs growth was the second-strongest in the past two-and-a-half years.
Rob Dobson, Senior Economist at survey compilers Markit, said, “On its current track, the sector should achieve output growth of over 1% in the final quarter while filling around 10-15 thousand jobs, continuing its positive contributions to both the broader economic and labour market recoveries.
“With the manufacturing sector still some 9% off its pre-crisis peak production, the question everyone wants answering is whether this upturn can develop into a self-sustaining recovery.
“Output and new orders are rising across all manufacturing sub-sectors and also at SMEs and large-scale producers.
CIPS CEO David Noble (pictured) said manufacturing had “all signs of powering ahead into 2014”, adding, “The only area of concern is the cost inflationary pressure which continued to build up during this final month, with input price inflation hitting a 28-month high.”
EEF chief economist Lee Hopley agreed that the data “provided a springboard for growth going into 2014”. She went on, “Surer signs of a manufacturing recovery in Europe together with steady growth both at home, in the US and emerging markets should align to support solid expansion of UK manufacturing in the year ahead. However, while we can hope to see more of the ground lost during the recession made up this year, we must also start to see new investments coming on stream if the sector is to secure a sustainable, long-term recovery.”
Copyright Ken Hurst 2014