Manufacturing growth hits 15-year high

Workman using grinder in workshop; manufacturing

The sector has performed beyond expectations

Manufacturing output rose at its fastest rate for 15 years last month thanks to strong exports.

Bolstered by the weak pound and a modest global recovery, the sector's purchasing managers' index (PMI) remained at the 15-year high reached in January.

The index, which measures the percentage of purchasing managers in manufacturing that reported better business conditions than in the previous month, maintained a score of 56.6. Anything above 50 denotes growth while anything below represents a contraction.

The figures represent a fillip for a troubled sector and outstrip the 56.1 score forecast by economists in a recent Reuters poll. Although the weak pound was expected to benefit UK exports, the effect was thought likely to be mitigated by the fact that a huge proportion of UK exports go to Europe, where the recovery is still sluggish.

We are seeing signs that seem to point towards a full sector recovery

David Noble, CIPS CEO

Manufacturers have also reported a substantial rise in new orders, which were up for the eighth month running, according to a survey by The Chartered Institute of Purchasing and Supply (CIPS). The biggest increases were in the capital, consumer and intermediate goods sectors.

"The manufacturing sector seems firmly back on the road after this severe recession," says David Noble, chief executive of the CIPS. "We are seeing signs that seem to point towards a full sector recovery.

"Most notably, companies reported that higher demand from export markets wasn't just on the back of the softer sterling but also improving global market conditions."

However, the global recovery has resulted in a reversal of recent falls in commodity and energy prices, translating into rising input and output prices for the manufacturing sector, which have reached their highest level for 18 months.
 

 

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