The Markit/CIPs Purchasing Managers Index showed that the manufacturing sector grew again in December.
The result of 57.3 for the final month of 2013 was lower than many analysts had been expecting and constitutes a growth slow down compared to November when UK manufacturing recorded its strongest month of growth in three years according to the index.
However, the December result is still strong and Markit/CIPS economists said it has kept the sector on track to achieve more than 1% growth for the fourth quarter overall. The measure of 57.3 also puts the UK manufacturing sector first for growth compared to European peers – Germany’s sector growth was 54.3.
Growth in manufacturing has been welcomed by economists and politicians as they seek to reduce reliance on consumer spending as a means to achieving economic recovery.
Commenting on the December PMI results, Mike Rigby, head of manufacturing at Barclays bank congratulated the sector on its strong performance in 2013 and issued an optimistic prognosis for the coming year.
“The sector has made good strides forward since the start of 2013 and the positive end to the year points to a strong 2014 for manufacturers,” he said.
“The main ingredients are in place, including stable FX rates, stable commodity prices, a recovering UK economy and a willingness from manufacturers to invest in R&D. If the sector continues to keep confidence and momentum up there’s no reason why it can’t outperform the UK economy in 2014.”
Lee Hopley, chief economist at EEF agreed that the PMI results provide a good springboard for manufacturing entering 2014. “Surer signs of a manufacturing recovery in Europe together with steady growth both at home, in the US and emerging markets should align to support solid expansion of UK manufacturing in the year ahead,” she said.
However, adding a note of caution, she concluded: “While we can hope to see more of the ground lost during the recession made up this year, we must also start to see new investments coming on stream if the sector is to secure a sustainable, long-term recovery.”