Manufacturing expansion cools but rebound continues – PMI

hague300Today’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

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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.
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