Manufacturers on the march in May says survey

THE improving sentiment surrounding the UK manufacturing industry has been underlined with the publication of new data showing the sector grew at its strongest pace in over a year in May.

The Markit/CIPS Purchasing Managers’ Index rose to 51.3 in May after returning to growth (50.2) in April. A figure above 50 indicates growth.

 Encouragingly, Markit said both production and new orders were accelerating, with the domestic market proving the main driver of new order inflows, although new export business also contributed with a modest increase.

Job creation was also up for the first time in four months, with companies reporting that the recent upturn in production had led to a clutch of new hirings.

Rob Dobson, senior economist at 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 euro zone, notably Germany, kept the recovery in new export orders alive.”

David Ost. North West director at EEF, the industrial organisation said’ “May’s rebound in manufacturing activity signals the strong likelihood of a positive second quarter for the sector.  Broad based improvements across industry supported by rising order inflows, even from parts of Europe where the pace of contraction is now starting to ease, provide some reasons for cautious optimism that manufacturing growth is turning a corner.

“While the survey notes that increased activity is feeding through to more recruitment, we also need to ensure that conditions are right for manufacturers to bring forward plans to increase business investment too.”