UK manufacturing growth hailed

Manufacturing export growth reached a near three-year high in January as the sector continued its strong pace of growth into the new year

Manufacturing
Manufacturing

Manufacturing export growth reached a near three-year high in January as the sector continued its strong pace of growth into the new year.

New order growth came from North America, mainland Europe, Asia, Brazil, Scandinavia and the Middle East.

However the reading of 56.7 for the sector as a whole on the closely watched CIPS/Markit purchasing managers’ index (PMI) survey – where the 50 mark separates growth from contraction - marked a three-month low, down from 57.2 in December.

While the overall figure was lower than expected it was still above average and new exports were at their highest level since February 2011, while jobs increased for the ninth month in a row.

The first month of this year saw factories churn out more goods in response to improved domestic and overseas demand.

Andy Tuscher, Northern Director at EEF, the manufacturers’ organisation, said: “Manufacturers have begun the year in positive mood, maintaining the solid activity trends seen during the second half of last year. With separate data showing a further improvement in manufacturing activity across the euro zone, this supports our forecast for UK manufacturing output to grow by 2.7% this year, the fastest rate of expansion in four years. 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.”

David Noble, chief executive at the Chartered Institute of Purchasing and Supply, said: “The continued improvement in global market conditions has ushered in a broad based and fully fledged recovery in manufacturing.

“Sustaining growth close to November’s near record numbers, the makers’ march continued in January, embodied by ever faster rates of new business growth and ongoing increases in employment levels.

“Whilst domestic demand continues to climb, it is the expansion overseas that promises continued growth. 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.”

Markit economist Rob Dobson said the jobs growth added to the prospect of unemployment soon falling to its 7% threshold - when policy makers will begin to consider an interest rate rise.

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