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UK manufacturing growth boosts jobs

THE UK's manufacturing sector has "continued to flourish" after posting its 16th straight month of output growth.

The latest Purchasing Manager's Index (PMI) rose to 57.5 last month, up from 57.0 in May.

The figures for June show that manufacturing activity has expanded at its fastest monthly rate since November while recording continuous month-on-month growth since February 2013.

Equally, job creation is now at its highest level since March 2011, with the steepest rate of new workers being registered by SMEs.

Nevertheless, large-scale producers also reported a solid increase in their payroll numbers.

Analysts from Markit say that, as a whole, the second quarter of 2014 was the strongest for 20 years.

Rob Dobson, senior economist at Markit, argued the sector was now within reach of output levels before the financial downturn.

He said: "UK manufacturing continued to flourish in June, rounding off one of the best quarters for the sector over the past two decades.

"With levels of production surging higher, and order books swollen by a further upswing in demand, job creation accelerated to its highest for over three years.

"The goods-producing sector has clearly maintained its leading position in spurring broader economic growth.

"We expect official manufacturing production to have expanded in the second quarter at a pace above the 1.5 per cent registered in the first quarter, making further headway into recovering pre-crisis output levels."

Although the sector accounts for only 10 per cent of the British economy, manufacturing has traditionally been a driver of higher incomes and productivity.

As such, the results of last month's PMI will add further weight to the suggestion that the UK's economic recovery is becoming more balanced.

Howard Archer, chief UK and European economist with IHS Global Insight, believes the sector's recent performance will serve as a solid platform for the rest of the year.

He said: "The survey made very healthy reading across the board in June, which bodes very well for manufacturing activity in the third quarter.

"This was the second-highest reading since in the index's lifetime and is substantially above its average of 51.4."

Mr Archer said prospects for manufacturers continue to look encouraging and added: "Buoyant consumer confidence, elevated and rising employment and a robust housing market should bolster demand for consumer goods, while purchasing power should gradually pick up.

"Manufacturers will be pleased to see that consumer confidence rose further in June to a high of more than nine years.

"[Also], consumers' opinion of the climate for making major purchases was at its highest level since August 2007."

The PMI is compiled each month by Markit and the Chartered Institute of Purchasing & Supply (CIPS).

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