Robust UK manufacturing data highlights strong start to 2015
UK’s Markit/CIPS manufacturing PMI data jumped to seven-month high in February.
Manufacturing activity in the UK continues to post robust growth and highlights that Britain well and truly started this year strongly, according to the latest manufacturing purchasing managers’ index from Markit/CIPS.
The report’s headline figure rose to a seven-month high of 54.1 in February, up from 53.1 in January. A figure above 50.0 indicates the sector is expanding and the UK’s PMI readings have now remained above this level for two years.
This latest update indicates that the UK’s economy will continue to grow in the first quarter of 2015 as growth rates in output and new orders both strengthened. However, while the domestic market remains solid, export orders were noted to decrease.
Despite the slowdown in exports, which will likely have been impacted by the appreciation of sterling versus the euro and other currencies, February’s data also signalled that manufacturing employment increased in the UK for the 22nd month running. The rate of jobs growth accelerated to a three-month high, as companies reported that the ongoing upturn in the sector was encouraging a pickup in job creation in small and medium-sized enterprises as well as large-sized firms.
“This is good news for the UK economy as higher staffing levels mean more opportunity for economic expansion,” said David Noble, group chief executive officer at the Chartered Institute of Procurement & Supply.
“The consumer goods sector was the star of the show, where there were significant increases in activity and stocks of raw materials continued to rise.”
Lower costs were cited as one of the key drivers behind the sector’s continued expansion, which could be attributed to the sharp decrease in oil prices continuing to filter through to manufacturers’ input costs during February.
“Although a welcome respite for margins, lower costs are being partly passed on in the form of reduced selling prices, adding to the short-term deflationary pressures in the economy,” said Rob Dobson, senior economist at Markit, and continued to suggest that waning inflation will see the Bank of England delay any coming rate increase until next year.
To read the full report from Markit click here.