UK manufacturing sector strengthens in June

Activity in the UK manufacturing sector grew at the fastest pace for seven months in June, a closely-watched survey has suggested.

The latest Markit/CIPS purchasing managers’ index (PMI) for the sector was 57.5, up from 57.0 in May. A reading above 50 indicates that the sector is expanding. Markit said the sector continued to “flourish”, with jobs being created at the fastest pace for more than three years. The survey results add to signs that the UK’s economic recovery is becoming more balanced.

The figure reflects one of the sector’s best spells of output and new order growth in the 22-year history of the survey and is the second-highest reading in 40 months, bettered only during this period by November’s 57.8.

The CIPS survey has now signalled expansion for the UK manufacturing industry for the past 16 months, with the June performance rounding off the sector’s best quarter since the start of 2011 and one of the best in the last two decades.

CIPS said strong domestic demand boosted new business sales, while export orders also edged higher despite the strength of the pound.

The latest official GDP figures, released on Friday, confirmed that the economy grew by 0.8% in the first quarter of the year and recorded the fastest expansion in business investment in two years.

Manufacturing employment also rose for the fourteenth successive month in June, with rising job numbers seen across all sectors and led by small and medium sized businesses.

Strong quarter

While the PMI survey indicated that manufacturing output saw a slight slowdown in the rate of growth last month, it said output had now increased for 16 months in a row. In addition, new orders grew at the fastest pace since November last year.

“UK manufacturing continued to flourish in June, rounding off one of the best quarters for the sector over the past two decades,” said Rob Dobson, senior economist at Markit.

“With levels of production surging higher, and order books swollen by a further upswing in demand from both domestic and overseas clients, job creation accelerated to its highest for over three years.”

David Tinsley, UK economist at BNP Paribas, said: “Manufacturing is growing strongly, and work flows suggest this has legs.

“This supports our view that UK GDP accelerated in Q2. As this news flow is absorbed further, rate hike expectations for the first hike in Q4 this year should harden.”

[BBC News + Belfast Telegraph]