Manufacturing growth predicted to outpace GDP

Figures released today show Britain’s manufacturing sector finishing the year strongly, with further growth predicted in 2014.

November’s UK Manufacturing PMI (Purchasing Manager’s Index) from Markit/CIPS rose to 58.4, the highest level since February 2011.

The upturn is being mirrored by levels of employment in the sector, which grew for the seventh consecutive month.

The improved performance of the sector largely reflected increases in manufacturing production and new orders. The upturn also remained broad-based, with all of the sub-sectors covered by the survey reporting increases in output and new business.

The domestic market remained the prime pillar of new order growth but companies also benefited from rising levels of new export orders in November.

Although the rate of growth in overseas demand was less marked than October’s 32-month high, it was still among the steepest registered following the global financial crisis.

In a statement, Rob Dobson, senior economist at Markit said: ‘The sector is on course to beat the 0.9 per cent increase in output seen in the third quarter, with the quarterly pace of growth so far in the final quarter tracking comfortably above the 1.0 per cent mark.

‘Manufacturing employment rose at the fastest pace since May 2011, signalling that companies are currently creating around five thousand jobs per month.

‘Sustaining the recovery remains the key and the news here is also positive. The manufacturing expansion remains broad-based by sector, demand from the domestic market continues to surge higher and new export orders are rising at a clip close to October’s 32-month high. The intermediate goods sector was the stand-out performer overall as many firms refilled depleted warehouse shelves, but marked growth at consumer and investment goods producers also suggests that household and capital spending will both be positive spurs for broader economic growth.’

In related news, EEF published its Q4 business trends and revised economic forecasts today predicting that manufacturing will grow by 2.7 per cent in 2014, faster than overall GDP.