A near survey-record level of new export orders saw UK manufacturing production increase for the twelfth consecutive month in July, according to the latest Markit/CIPS Purchasing Managers’ Index (PMI).
The headline UK manufacturing PMI was reportedly boosted by stronger inflows of new work, higher levels of production, improved job creation, longer supplier delivery times and a marginal increase in inventory holdings.
The PMI rose to 55.1 in July, compared to 54.2 in June, with the rate of improvement in UK manufacturing operating conditions increasing for the first time in three months.
UK manufacturing production increased for the twelfth straight month, and although the rate of expansion eased to its lowest since March 2017, it remained above the survey average.
The boost in output and export orders saw job creation similarly increase for the twelfth consecutive month, reportedly at a level not seen for at least three years.
New export growth came from across the globe, including North America, Europe, Asia-Pacific and the Middle East. The UK market also offered a healthy level of new work, albeit not to as great an extent as projected earlier in the year.
UK manufacturers are described as maintaining a positive outlook for the future, with almost 49% expecting production to be higher in 12 months’ time. Only 5% are forecasting a contraction.
Their positivity was pegged to a combination of further increases in export order volumes, new product launches, improved market share and expansion into new markets, global economic recovery, and investment in new capacity.
Chief economist at EEF, Lee Hopley explained: “UK manufacturers appear to be riding high going into the second half of the year with the sector in the UK and Europe continuing to be buoyed by a recovering global economy, alongside efforts to bring new products to the market.
“Above trend responses across the key components of the survey would signal that the drag on overall economic growth from the sector in the second quarter of this year is likely to be temporary.
“While this is positive news for the UK’s growth outlook, at least in the short-term, it doesn’t make the MPC’s balancing act any less tricky this week. Some comfort will, however, come from further signs that cost pressures on the supply chain are easing and the pass through to consumers should be on the wane.”
Head of Manufacturing at Barclays, Mike Rigby commented: “Manufacturers continue to grind out positive results helped by a recovering global economy and a weaker pound, allowing the industry to post the strongest rate of export growth for more than seven years.
“Healthy order books and promising levels of new investment are driving performance within this key sector. However, despite a slight easing on the cost side in July, cost challenges are still circling and margins remain under pressure.
“Higher prices may take their toll on domestic demand which has been fuelling growth in the first half of the year, so the timing of this return to strong export growth could not be better.”
Dave Atkinson, UK head of manufacturing at Lloyds Bank Commercial Banking, said: “After hitting a three-month low in June it’s good to see PMI has increased this month. Sentiment in the industry is positive and firms are forecasting growth.
He added: “Firms are facing uncertainty around the UK’s future trading relationship with the EU, but figures suggest exports are rising with a year-on-year increase of 15%. This is partly a result of the weaker pound, but also because more manufacturers are looking at new international markets beyond Europe.
“Manufacturers are planning positively for the future with continued investment, product development and new business at home and away.”