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UK manufacturing at two-year high


Posted on 2/07/2013 by Wayne Brophy FCILT

Manufacturing in the UK looks set for recovery, as last month’s Purchasing Managers’ Index (PMI) reached its highest level for more than two years.

June’s PMI, published by Markit and the Chartered Institute of Purchasing and Supply (CIPS), stood at 52.5. Above the 50.0 mark which indicates positive territory, the figure is also higher than the score 51.5 achieved in May, meaning that last month demonstrated the fastest rate of increase for 25 months.

Over the course of the second quarter of this year, the average reading stood at 51.4 – the greatest since the same quarter in 2011.

Levels of production performed particularly well, rising at the fastest rate since April 2011, while new business shot up at the quickest rate since February 2011. Domestic market conditions improved again, while prospective exporters received a boost as foreign demand grew as well.

The rise in new orders was the fourth in as many months, with manufacturers reporting solid demand both at home and from clients in the EU, China, Scandinavia, North America and the Middle East. Encouragingly, several companies put this down to rising confidence among clients and consumers alike, while other mentioned new product lines and more seasonable weather.

Every subsector showed signs of improvement, with the strongest performance in the textiles and clothing category, as well as food and drink. However, employment in the manufacturing sector remained mostly flat.

Improvements in the sector led to increased procurement activity as firms sought to acquire more materials so they could meet growing demand. Although input inventories still fell, they did so at the weakest rate since August.

“Momentum is building in manufacturing as the sector begins to work up a head of steam,” said David Noble, CIPS chief executive.

“Firms will also take heart from the drop in input costs, which has enabled them to reduce their own prices for the first time in over three years. This has eased the pressure on margins and enabled manufacturers to stay competitive. Long may it continue.”

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