Manufacturing expansion accelerates

4 January 2011

4 January 2011 | Lindsay Clark

Growth in UK manufacturing hit a 16-year high in December, a survey of buyers has found.

Markit/CIPS UK Manufacturing PMI rose to 58.3 in December 2010, up from 57.5 in November, signalling 17 consecutive months above the 50 no-change mark on the index.

Rob Dobson, senior economist at Markit and author of the UK Manufacturing PMI, said: “The UK manufacturing sector saw a truly spectacular end to 2010. The PMI rose to a 16-year high and strong export growth pushed rates of expansion in output and new orders to the highest since May. Job creation also stayed close to November’s near survey record pace.

“The latest figures are consistent with manufacturing production rising at a quarterly rate close to 2 per cent, which should generate a meaningful contribution from the sector to economic growth in the fourth quarter to offset likely weakness in other sectors. All of this points to manufacturing being a positive spur to economic recovery in the final quarter.”

However, CIPS CEO David Noble cautioned against over-optimism.

"Before we breathe a sigh of relief, last month was not without its challenges,” he said. “Adverse weather conditions contributed to longer vendor lead times, while surging demand for certain goods has depleted stocks, leading some purchasers to try and replenish inventories. There are also ongoing efforts to guard against rising cost inflation and possible further winter disruption to the supply chain by buying early."

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