Demand improves outlook

Activity in Britain’s manufacturing sector jumped to its highest level in more than four years amid “solid” domestic demand and a wave of export orders on the back of the weaker pound.

The IHS Markit/CIPS UK Manufacturing purchasing managers’ index (PMI) came in at 58.2 for November, its strongest reading since August 2013.

It was up from 56.6 in October and exceeded economist expectations of 56.5. A reading above 50 indicates growth.

Production gathered pace thanks to a raft of new orders that companies attributed to “solid domestic demand” and export business driven by higher sales to clients in Europe, the Americas, Asia and the Middle East.

The weak pound was still boosting the competitiveness of UK goods abroad, but the survey said that the currency was given less credit for helping raise demand than a year earlier.

Rob Dobson, a director at IHS Markit, said the November reading was a sign that the manufacturing sector had “shifted up a gear” as output growth, new orders and employment all gathered pace.

“On its current course, manufacturing production is rising at a quarterly rate approaching 2%, providing a real boost to the pace of broader economic expansion,” he said.

The manufacturing industry benefited from a “broad-based” expansion, experiencing “strong and accelerated growth” in production and new orders in consumer, intermediate and investment goods – with the latter seeing its sharpest order increase since August 1994.

It resulted in a bigger backlog of work at UK factories, which increased for the first time in six months and sparking worker demand that led to the highest job growth rate since June 2014.

However, the sector was still feeling cost pressures, triggered by higher prices for oil and steel, combined with supply-chain constraints and the effects of the weaker pound.

The manufacturing sector is the most confident it has been since 2013, according to the survey. Picture: www.scottishphotographer.com.