Today’s monthly Markit/CIPS Purchasing Manager’s Index (PMI) – a bellwether of the UK’s manufacturing economy – dropped to its lowest level for three months though, at 56.7, remains above the neutral 50.0 level that indicates stagnation and above its 51.3 average.
The index authors also point out that improved domestic demand and rising export orders supported “solid output growth” and that employment increased for the ninth straight month.
Rob Dobson, Senior Economist at survey compilers Markit, said the sector had made “a strong start to the new year, continuing the robust upsurge in production seen at the tail end of 2013”.
He continued: “Although the pace of output expansion has cooled slightly in recent months, growth is still tracking at one of the highest rates in the 22-year survey history. The broad base of the upturn is remarkable, with its benefits being felt across all product categories and at SMEs and large-scale producers alike.”
Dobson confirmed that the domestic market remained the main pillar of the rebound and that “the long awaited rebalancing of economic growth may also finally be within sight”.
He added: “The latest survey provided good news on the jobs front as well, with manufacturers adding to their payrolls at one the fastest clips seen for two-and-a-half years.”
Commenting on the new data, EEF chief economist Lee Hopley said it supported her organisation’s forecast for UK manufacturing output to grow by 2.7% this year – the fastest rate of expansion in four years.
However, she added: “Some doubts will persist, however, over the durability of this upturn given the ongoing weakness in investment spending and concerns over the impact of high energy costs across the sector.”
CIPS CEO David Noble believed the continued improvement was ushering in “a fully fledged recovery in manufacturing.
On exports, he added: “The illusive export market has long been heralded as the key to unlock UK economic growth and in manufacturing appears to be coming to fruition, with new business rates climbing fastest in nearly three years.”
UK manufacturers reported improved demand from North America, mainland Europe, Asia, Brazil, Scandinavia and the Middle-East, with the ongoing improvement in global market conditions driving the rate of increase in new export business to a near three-year record.
Copyright Ken Hurst 2014