UK manufacturing activity continues to build

The UK's manufacturing sector is continuing to show signs of improvement as a key sector indicator hit its highest point this year.

The latest report from the Chartered Institute of Purchasing and Supply (CIPS) has revealed that the Purchasing Managers Index (PMI) had shown further tentative growth in the UK manufacturing sector.

The PMI rose for the third consecutive month to hit 50.7 in March - its highest level since February 2001. This is taken as indicating that the manufacturing economy is in the process of a cautious rebuilding of inventories in preparation for increased manufacturing activities.

The PMI, a composite indicator designed to provide an overall view o the manufacturing economy, remained above the critical no change mark for the second successive month – up from a revised level in February.

Roy Ayliffe, Director of Professional Practice at CIPS said: "March’s Purchasing Managers Index provided a good news story with all three sectors showing growth of demand for the first time since February 2001. The Index continued to move in the right direction for manufacturers in March, following on from February’s upturn.

"Additionally, low levels of inflation, coupled with Purchasing Managers making reductions in their inventories, allowed companies to keep their costs down where possible.”

As in previous months, the consumer goods sector continued to outperform the manufacturing economy. However, for the first time since February 2001, simultaneous growth of demand was recorded across each of the three broad sectors monitored in March.

Despite the continuation of last month’s positive output and order book positions, the byword was caution.

The recent boost to manufacturing demand is reported to be partly due to "inventory correction" by clients following a prolonged period of stock clearance.

CIPS said that firms appeared to be reluctant to embrace the rebound in global markets, as there was continued uncertainty as to whether this growth would be sustained.

(SP)