UK Manufacturing Continues To Grow

The UK's manufacturing sector continues to grow, with May's records indicating the fastest growth in over a year.

The latest Markit/CIPS report shows growth of production and new orders both accelerating.

At 51.3 in May, up from a revised 50.2 in April, the seasonally adjusted Markit/CIPS Purchasing Manager’s Index posted its highest reading since March 2012 and remained above the neutral 50.0 mark for the second straight month.

Incoming new orders rose for the third consecutive month in May, while new export orders also rose.

Higher demand has been reported from North America, East Asia, Russia, Germany and France.

Job creation was recorded for the first time in four months, with companies reporting that a recent upturn in production has led to new hirings.

Rob Dobson, Senior Economist at survey compilers Markit, said: "The UK manufacturing sector had a spring in its step in May, as a brightening domestic market led to faster growth of output and new orders. One of the more positive features of the expansion is its broad-base, with producers of consumer, intermediate and investment goods all reporting stronger output growth.

"Output is also likely to be raised further in the coming months, as firms refill warehouses after stronger than expected demand has led to a sharp depletion in finished goods stocks. The tentative return to job creation in the sector in May also suggests that manufacturers are becoming more confident in the outlook.

"Although the domestic market was the main impetus to new order inflows, demand from overseas markets at least managed to keep its head above water, as higher demand from Asia, North America and pockets of the Eurozone, notably Germany, kept the recovery in new export orders alive.

"Following the solid growth registered by the service sector in the first quarter GDP numbers, signs that the manufacturing sector is also recovering will add further weight to the Bank of England’s decision to wait-and-see before adding to its accommodative policy stance."

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply added: "Optimism abounds in the manufacturing sector as continued growth, improving economic conditions, new orders and job creation all contribute to a 14- month high for the PMI in May. The industry, battered and bruised in the last 18 months, is still building from a low base and as ever, there’s more work to do, but this is a solid foundation which bodes well for the future."

(IT)