Manufacturing production increased for the fifteenth successive month in May, reflecting improved order books and stronger economic conditions.
- Manufacturing PMI at 57.0 in May, down slightly from 57.3 in April
- Strong growth of output, new orders and new export business maintained
- Broad-based jobs creation
According to the latest Markit/CIPS UK Manufacturing PMI, the recovery remained broad-based, with marked expansions of output and new orders registered across the consumer, intermediate and investment goods sectors.
May saw the UK manufacturing sector maintain one of its brightest spells of output and new order growth in the 22-year survey history. As manufacturers ramped up production to meet strong inflows of new work from both domestic and export markets, the benefits were also shared with the wider economy through solid job creation and rising levels of input purchasing.
New export orders rose for the fourteenth consecutive month in May. Companies reported improved demand from countries including the US, Asia, Canada, Europe, the Middle East and New Zealand. Increases were most likely linked to new product launches and efforts to increase market share.
Manufacturing employment increased for the thirteenth month running. Jobs growth was broad-based across consumer, intermediate and investment goods producers and at SMEs and large companies. With both employment and output rising, manufacturers reduced the level of work-in-hand at their factories for the third month in a row.
Rob Dobson, senior economist at Markit said: “The revival of UK manufacturing continued in May, as the sector basked in one of its brightest growth spells of the past two decades. Manufacturing production is currently expanding at a quarterly rate close to 1.5%, according to the PMI, helping the sector take huge strides towards recouping the output lost during the recession. However, with manufacturing still some 7.5% smaller than its pre-crisis peak, even at this current growth rate it would take until late-2015 to achieve full recovery.
“Sustaining the rebound and continuing to push towards rebalancing the UK economy towards manufacturing therefore remains critical. On those scores the latest survey provides some real positives.
“The upturn remains broad-based by sector and is being enjoyed by SMEs and large-scale producers alike. A sharp re-acceleration in demand for goods such as plant and machinery also points to ongoing growth of business investment. A strong domestic market is meanwhile being supplemented by one of the best growth phases for new export orders in the survey history. The benefits of the manufacturing upswing are also being shared with the wider economy through solid job creation.
“As manufacturing only makes up a small share of the UK economy, around 10%, these positive data are unlikely to shift the Bank of England’s MPC on to the path of normalising monetary policy on their own. The first piece of that puzzle nonetheless seems to be in place and, if accompanied by further surging growth elsewhere in the economy, the clearer picture unfolding could raise the stakes for an earlier than expected step in that direction.”