UK manufacturing sees 'robust increases' in output

Gurjit Degun
3 March 2014

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3 March 2014 | Gurjit Degun

The UK manufacturing sector continued to see strong growth last month as levels of production and new business continued to rise at “robust and above-trend rates”.

The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) reached 56.9 in February, compared with 56.6 in January, above the baseline of 50. This signalled improved operating conditions for 11 months running.

The survey found the strengthening domestic market remained the primary driver of the manufacturing recovery. Consumer, intermediate and investment goods producers reported “robust increases” in output, new orders and employment during February, suggesting that the upturn remained broad-based by sector.

There was positive news from new export business which also posted a “solid gain” last month. But the rate of growth eased from January’s near three-year high. Manufacturers reported improved inflows of new work from clients in Europe, the US, China, the Middle East and Africa.

The improvements in the sector led to manufacturing employment rising at the fastest pace since May 2011. This followed signs of strain on the capacity of some firms, as highlighted by a slight gain in backlogs of work during February.

Average selling prices rose for the eighth consecutive month too, and to a greater extent than in January.

Rob Dobson, senior economist at Markit, said: “On the export front, a slower increase in new export orders was a bit disappointing, attributed in many cases to the recent appreciation of sterling. However, overseas contract wins should remain a spur to growth as conditions in key markets such as the US and eurozone improve further.”

CIPS group CEO David Noble added: “Input prices showed no change, giving factories some breathing space to increase their selling prices and allowing them to catch up on profitability, whilst protecting margins. Added to this, backlogs of works increased for the first time in over three years, keeping hopes of stability alive for the months ahead.”

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