Cautious optimism as manufacturing sustains momentum

2 August 2010

2 August 2010 | Lindsay Clark

A survey of purchasing managers shows sustained growth in the UK manufacturing sector, with a strong increase in new orders.

Although the Markit/CIPS UK Manufacturing Purchasing Managers’ Index hit a five-month low, at 57.3, this remains close to its post-recession peak. A score of 50 marks no change in manufacturing activity.

The latest figures from Markit and CIPS show increases in both production and new work received in July, while employment has increased for the fourth consecutive month.

David Noble, CEO of CIPS, said: “Even after the booming growth seen in the first half of 2010, it’s good to see the UK manufacturing sector holding strong as we head into the second half of the year. While trade from Europe slowed, this was partially offset by strong demand from the US and Asia.”

However, Rob Dobson, senior economist at Markit and author of the UK Manufacturing PMI, said there remained some reasons for concern in the sector: “Overseas sales growth collapsed from a survey record rate of increase in April to near-stagnation in July.

"Some slowing was to be expected, given the weakening in global trade flows that have been evident in recent months, particularly in Asia, as authorities act to cool their economies to ward off inflation. But the extent of the slowdown in export sales is very surprising and suggests that UK manufacturers are losing out in the global recovery, which will disappoint those hoping the UK economy can rebalance away from domestic consumption towards exports.”

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