UK manufacturing upsurge continues
Data collected 12-27 May 2014
Manufacturing PMI at 57.0 in May, down slightly from 57.3 in April
Strong growth of output, new orders and new export business maintained
Broad-based jobs creation
May saw the UK manufacturing sector maintain one of its brightest spells of output and new order growth in the 22-year survey history. As manufacturers ramped up production to meet strong inflows of new work from both domestic and export markets, the benefits were also shared with the wider economy through solid job creation and rising levels of input purchasing.
At 57.0 in May, the headline seasonally adjusted Markit/CIPS Purchasing Manager’s Index® (PMI®) posted close to April’s five-month high of 57.3 and again registered one of its highest readings in the survey history. The PMI has now signalled an improvement in overall operating conditions in each month since March last year.
Manufacturing production increased for the fifteenth successive month in May, reflecting improved order books and stronger economic conditions. The recovery remained broad-based, with marked expansions of output and new orders registered across the consumer, intermediate and investment goods sectors.
Investment goods producers saw an especially marked acceleration in the rate of increase in new orders, representing a positive bounce following slower demand growth in March and April.
New export orders rose for the fourteenth consecutive month in May. Companies reported improved demand from the US, Asia, Canada, Europe, the Middle East and New Zealand. Where an increase was signalled, this was linked to new product launches and efforts to increase market share.
Manufacturing employment increased for the thirteenth month running. Jobs growth was broad-based across consumer, intermediate and investment goods producers and at SMEs and large companies. With both employment and output rising, manufacturers reduced the level of work-in-hand at their factories for the third month in a row.
Strong demand supported manufacturers’ efforts to raise average selling prices during the latest survey period, with May seeing output charges increase for the eleventh month running. However, the rate of inflation eased for the third straight month to its weakest since August 2013.
Average purchasing costs fell for the fourth month running in May, reflecting lower prices paid for commodities, energy and dairy products. The exchange rate also led to decreased costs for some imported inputs.
David Noble, Group Chief Executive Officer at the Chartered Institute of Purchasing & Supply:
"British manufacturers march onwards to mirror last month’s strong performance. Growth of new business and export orders remained strong in May, and firms are ramping up production to meet this demand. As a result, and in line with robust economic conditions, it can be said, that we’re starting to see real evidence of a sustained recovery for the sector.
The recovery remains broad-based with ongoing expansion in May from the consumer and intermediate sectors, alongside a positive resurgence in pace of expansion at investment goods producers after experiencing a slowdown in recent months. This strong upturn continues to also feed through to the labour market, with more jobs boosts across both SMEs and large companies.
Rising demand and a further drop in input prices is having a positive impact on the cost side, as factories have been able to ramp up their selling prices for the eleventh month running. At the same time however, the pressure to keep up the pace of production is filtering through to suppliers and is resulting in an ongoing lengthening of delivery times."
The June 2014 Report on Manufacturing
will be published on: Tuesday 1st July 2014 at 09:30