Robust recovery continues for UK manufacturing

1 July 2010

1 July 2010 | Angeline Albert

A strong manufacturing pace has been reported for June with production for the UK sector rising for the 13th consecutive month, according to the Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) out today.

The PMI posted 57.7 for June, where a score of 50 represents no change. The trend continues from April and May’s figure of 58.

Employment rose at its fastest pace since February 1995, thanks to strong output growth, which encouraged manufacturers to create new jobs. New orders increased for the 12th consecutive month and domestic demand remained solid.

Manufacturers reported higher purchase prices for chemicals, food products, metal, paper and timber. Part of the increase in costs was passed on to clients and, as a result average selling prices, rose for the eighth successive month.

Growth of new export orders slowed sharply and showed only a marginal increase in June with reports saying the pressure on global supply chains had disrupted delivery and production schedules. Some firms said sales to mainland Europe were affected by fragile recovery in the euro-zone and strengthening of the exchange rate against the euro.

CIPS CEO David Noble said: “It’s been a tense month for the UK manufacturing sector. The sector maintained strong momentum in June but looming headwinds are causing some insecurity.

“We’re already starting to see the turbulent euro-zone make its mark, which is causing unease given that export orders arguably led the sector out of the recession. Further uncertainty has been reflected with cautious suppliers unwilling to restock despite demand outpacing the supply of materials, creating a seller’s market.

“The only thing clear at the moment is manufacturers will have to work hard to outstrip competition and secure future business wins if this pace of recovery continues.”

Further coverage of PMI reports is available here.

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