UK manufacturing sector maintains ‘stellar’ performance
The UK manufacturing sector continued to expand during September, to deliver its strongest quarterly performance since the first quarter of 2011. The seasonally adjusted Markit/CIPS Purchasing Manager’s Index (PMI) expanded for the sixth successive month, and the labour market also showed further signs of improvement, with the rate of job creation hitting a 28-month peak.
“The manufacturing sector maintained its stellar performance this month, building on last month’s two-and-a-half-year high to round off the best quarter of growth since Q1 2011,” reports David Noble, CEO of the Chartered Institute of Purchasing & Supply. “Employment levels soared in September, rising at the sharpest pace since May 2011, completing a positive outlook for the rest of the year.
“The domestic market remains the engine for growth,” he adds, “boosting new business in the UK and giving manufacturers added confidence.”
Manufacturing production expanded for the sixth consecutive month in September, with the rate of increase staying close to August’s 19-year high. The growth rate in incoming new orders also lost only minor impetus from a similar peak last month.
The growth in output and new order volumes was felt across the manufacturing industry, with all of the sub-sectors covered by the survey reporting increases in both. Although the level of new export business also rose in September, it was its weakest since May.
“UK manufacturing continues to boom,” says Rob Dobson, senior economist at survey compiler, Markit, “adding to the flow of upbeat data which suggests that the economy is growing faster than almost anyone expected. The September PMI survey showed rates of output and new order growth retreating only slightly from the 19-year peaks seen in August.
“Job creation is also on the rise,” he adds, “with manufacturers reporting the strongest employment growth since May 2011 as firms took on more staff to meet faster order book growth.
“These numbers are encouraging in respect to the rebalancing of the economy, with goods production likely to provide a major stimulus to economic growth in the third quarter,” Dobson comments. “We would expect to see manufacturing output expanding by at least 1% in the three months to September and possibly by as much as 1.5%.”
According to Dobson, “the main disappointment came in the form of a slower rise in export orders. With the exchange rate still around 20% weaker than before the financial crisis, we would expect to be seeing far stronger export gains than companies are currently reporting, especially with the Eurozone showing signs of finally pulling out of recession.”
