Britain's manufacturers took another step in their recovery last month as the sector continues to enjoy one of its best spells of the past two decades.
Data from the closely watched CIPS/Markit purchasing managers’ index survey for May gave a reading of 57 – with 50 separating growth from contraction.
The figure is close to April’s five-month high of 57.3 and maintains one of the sector’s brightest spells of output and new order growth in the 22-year history of the survey.
Markit said production is expanding at a quarterly rate close to 1.5%, although the sector is still some 7.5% smaller than its pre-crisis peak. At this growth rate it would take until late-2015 to achieve a full recovery.
The upturn is being enjoyed by both small businesses and large-scale producers, while a sharp re-acceleration in demand for goods such as plant and machinery points to ongoing growth of business investment.
A strong domestic market has been accompanied by one of the best growth spurts for new export orders in the survey’s history.
The benefits of the manufacturing upswing are also being shared with the wider economy as employment increased for the 13th month running.
Neil Prothero, deputy chief economist at EEF, the manufacturers’ organisation, said the sector is on track to expand for a fifth consecutive quarter, its strongest performance in four years.
He added: “Signs of a pick-up in export orders are especially welcome, as the broader rebalancing story still requires a significant boost in net trade to support the recent rebound in business investment.”
Strong demand meant manufacturers were able to increase average selling prices, although the rate of inflation eased for the third straight month.
The survey also found that purchasing costs fell for the fourth month running in May, reflecting lower prices for commodities, energy and dairy products.
Markit economist Rob Dobson said the latest figures will increase the pressure on the Bank of England to move interest rates for the first time in five years.
He said: “As manufacturing only makes up a small share of the UK economy, around 10%, these positive data are unlikely to shift the Bank of England’s monetary policy committee on to the path of normalising monetary policy on their own. The first piece of that puzzle nonetheless seems to be in place and, if accompanied by further surging growth elsewhere in the economy, the clearer picture unfolding could raise the stakes for an earlier-than-expected step in that direction.”