UK manufacturing employment rose for the fourteenth successive month

Data from the closely watched CIPS/Markit purchasing managers’ index survey for June gave a better-than-expected reading of 57.5, up from 57 a month earlier

David Jones/PA Wire Manufacturing
Manufacturing

Britain's manufacturers have continued to flourish after new figures showed the sector enjoyed one of its best quarters of the past two decades.

Data from the closely watched CIPS/Markit purchasing managers’ index survey for June gave a better-than-expected reading of 57.5, up from 57 a month earlier and above the 50 threshold which separates growth from contraction.

The figure reflects one of the sector’s best spells of output and new order growth in the 22-year history of the survey and is the second-highest reading in 40 months, bettered only during this period by November’s 57.8.

The CIPS survey has now signalled expansion for the past 16 months, with the June performance rounding off the sector’s best quarter since the start of 2011 and one of the best in the last two decades.

CIPS said strong domestic demand boosted new business sales, while export orders also edged higher despite the strength of the pound.

Manufacturing employment rose for the fourteenth successive month in June, with rising job numbers seen across all sectors and led by small and medium sized businesses.

The update meant sterling climbed to a new six-year high of more than 1.71 US dollars as the economic recovery makes it increasingly likely that the Bank of England will take the lead on raising interest rates later this year.

Scotiabank economist Alan Clarke said of the CIPS figures: “This is a very good performance, particularly when you consider that the pound is 10% stronger and expectations for the first rate hike have been brought forward somewhat in recent months.”

The index measuring input prices rose from 48.6 to 50.6 - the first reading above 50 since January - although Samuel Tombs of Capital Economics noted that the figure was still below the average of 53 in 2013.

He added: “All in all, June’s CIPS manufacturing survey suggests that the industrial recovery remains in full flow.

And looking ahead, as long as the pound does not appreciate much further, the outlook looks positive for manufacturers.”

Dianne Sharp, Regional Director of CBI North East, said: “The national picture for manufacturing is encouraging, with recent CBI surveys confirming that manufacturers are becoming more confident as order books begin to swell.

“In the North East we cannot afford to rest on our laurels, with confidence within the sector being offset by a recent 6,000 quarter-on-quarter drop in the manufacturing workforce.

“To boost the manufacturing sector in all parts of the UK, we need to take action to strengthen supply chains. That’s the way to unlock further growth, increase exports and help the sector to create jobs.”

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