Factory output on the up in both UK and Eurozone

The growth in output in the UK's manufacturing sector industry eased back slightly in May from the previous month's three-year high, but remained above analysts' expectations thanks to a healthy growth in new orders.Meanwhile, manufacturing growth in the eurozone also continued to pick up, creating the biggest rise in job creation in the sector for 20 years.  

Markit/CIPS purchasing managers' Index

The Markit/CIPS purchasing managers' index (PMI) for UK manufacturing stood at 56.7 last month, slightly down from 57.3 in April but above economists' expectations in an index where a reading above 50 indicates expansion.Growth was driven by strong demand both domestically and for exports. The PMI also recorded growing optimism among manufacturers over prospects for the year ahead.Rob Dobson, senior economist at IHS Markit, said the figures indicated the sector had regained growth momentum after a sluggish start to the year. "The ongoing strength of the domestic market remains the main driver of the upturn," he said."Growth of new export business played a lesser role in comparison, with the trend in foreign demand continuing to improve only in fits and starts, despite the assistance of a historically weak sterling exchange rate."The survey also provided positive signs that the upturn may be sustained, as growth of new orders remained solid, backlogs of work rose at the quickest pace in six years and business optimism improved to a 20-month high."

Signs UK manufacturers are shrugging off political uncertainty

Duncan Brock from the Chartered Institute of Procurement and Supply, said the signs were that manufacturers were shrugging off political uncertainty ahead of this month's general election and the start of Brexit negotiations.“While not quite hitting the heights of April’s rebound in activity, the manufacturing sector didn’t disappoint with a sustained rise in purchasing activity, output and new orders, optimism at a 20-month high, and storming ahead unfazed by the looming election.“The domestic market persisted as the driving force, but the weak pound’s continuing bounty meant levels of export orders also increased, for the thirteenth month, as export markets made use of the competitiveness of UK firms."Lee Hopley, chief economist at the manufacturers’ organisation EEF, said the signs were that UK manufacturing was in good shape. She said: "Output and orders expansion is being driven by resilient demand coming through UK supply chains and a better looking global economy than UK manufacturers have been used to for some time."

Eurozone manufacturing also on the up

The data from the eurozone showed that European factories had racked up their fastest growth in six years in May, with the PMI standing at 57.0, up from 56.7 in April. German factories led the latest spurt with output at a 73-month high. Most other eurozone countries also posted growth, but there was further contraction in Greece.Chris Williamson, chief business economist at IHS Markit, commented: “The eurozone upturn is developing deeper roots as factories enjoy a spring growth spurt. Demand for goods is growing at the steepest rate for six years, encouraging manufacturers to step up production and take on extra staff at a rate not previously seen in the two decade history of the PMI survey.“The fact that the upturn is being accompanied by such strong jobs growth sends a signal that increasing numbers of companies are moving away from a focus on cost cutting towards investing in expansion, underscoring the elevated levels of business optimism seen across the region. The record hiring adds to the sense that the upturn is looking more and more robust as each month goes by. "

©2024 Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.