Manufacturing sector grows at record rate

THE recovery in the UK’s manufacturing sector continues to grow – despite many claims the industry is continuing to struggle in the face of competing markers.

The latest figures from the Purchasing Managers’ Index (PMI) – considered the true barometer for the overall health of the industry – grew at its fastest rate for 16 years last month.

The index grew to 58 in November, which compares to with 55.4 in October. Anything above 50 suggests a growing economy.

Observers said the index had been boosted by a record growth in the number of manufacturing jobs, with many suggesting the increase could not have come at a more welcome time considering the deep spending cuts announced by the Government.

The strong performance in the UK was mirrored by similar growth in the United States and China. The combined figures helped to give a welcome boost to global shares.

Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club, said the results were very encouraging, adding there was evidence of a genuine improvement in all of the main components, with the sales pipeline looking particularly strong.

He said the results suggested that the recovery still has good momentum and the Q4 GDP outturn was likely to be firm.

However, he added a note of caution saying while the pickup in manufacturing employment was encouraging, it was nevertheless a small sector and could not support the labour market on its own.

“Respondents reported the fastest ever growth in manufacturing employment in November which is good news for a sector where employment levels have been persistently falling for several decades,” he said.

“But we shouldn’t get too carried away about what this means for the wider labour market outlook – manufacturing now accounts for less than 9% of UK employment so manufacturing job creation is not going to be able to offset the likely decline in public sector employment on its own. If unemployment is not to rise next year then private services firms will need to step up their hiring, alongside the improvement in manufacturing job prospects.”