Growth in the UK manufacturing sector soared to a 10-month high in August after the slump it experienced following the Brexit referendum.
CIPS group CEO David Noble said the “Brexit brakes are off” after the IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index increased at the joint-fastest rate in 25 years.
The index rose to 53.3 in August from July’s 41-month low of 48.3, against the no-change position of 50.
New business increased at one of the quickest rates so far this year from both domestic and overseas clients with sales increasing to markets such as the US, Europe, China, Southeast Asia and the Middle East. Production rose across the board, with the strongest expansion registered in the consumer goods sector.
The fall in the value of the pound was the main factor supporting export growth, said manufacturers, which was also felt in rising input costs, with inflation surging to a five-year high.
Some 44% of firms reported an increase in purchasing prices, while output prices rose at the fastest pace for five years.
Noble said: “Fuelled by a combination of export and domestic orders, the increase in the level of the headline PMI equalled its best during the survey’s quarter of a century history.
“An increase in stock building could signal more positive hope for the coming months but it remains to be seen whether this expansion of activity is merely filling the post-Brexit void or whether this strong performance will continue.”
Rob Dobson, senior economist at IHS Markit, said: “Rates of increase in input prices and output charges both hit five-year highs, which manufacturers placed squarely at the door of the cost impact of sterling on import prices.
"It is too early to say whether the rebounds in growth and inflation will be sustained, but the upturn in August suggests the weaker exchange rate and recent policy action have helped to avert a downturn.”
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