Last month sees biggest UK manufacturing growth for a year, with both production and new orders increasing.
BBC News reports that the Markit/CIPS Purchasing Managers’ Index (PMI) for the UK manufacturing sector increased to 51.3 in May compared to 50.2 a month previously, with any figure over 50 indicating expansion.
The figure is the highest the UK has seen for more than a year as production and new orders pick up and the domestic market drives demand for new business. It was also revealed that the manufacturing sector created jobs for the first time in four months.
A further reason for the sector’s growth is that weaker commodity prices have meant that the cost of raw materials has reduced; while Rob Dobson, an economist at Markit, said that “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”.
The results have led to optimistic responses from analysts, with the manufacturing sector representing just over 10 percent of the UK’s economy. Scotiabank’s Alan Clarke said: “It’s encouraging. And given that recently we’ve tended to see UK data as an early warning of what’s happening in the eurozone, it suggests to me that this improving trend in business sentiment will continue […] It’s hardly a booming level but it’s improving nonetheless.”
While the results of Markit’s PMI for the Eurozone manufacturing sector remained below 50, they rose to the highest level in 15 months, reaching 48.3 – an improvement from April’s 46.7.
Following the disclosure of the UK’s PMI figures, the pound rose against the dollar to its strongest level in two weeks, with a 0.5 percent increase to $1.5289 (€1.169).
The UK’s manufacturing sector results are in contrast to those of China, which saw its lowest level since October 2012 due to a fall in both domestic and external demand, with figures falling below 50 to 49.2.