Manufacturing growth hits a four-month high

MANUFACTURING exceeded expectations last month as growth accelerated to hit a four-month high, according to a closely-watched survey.

IHS Markit’s UK manufacturing purchasing managers’ index jumped to 56.9 in August, higher than the 55 that had been expected and above the 55.1 reported in July. Any number above 50 suggests growth in the sector’s output.

The survey found “broad-based expansion” across all products, and production rose at the steepest pace in seven months, underpinned by more work received especially in Europe, the US, China and Australia.

However, while the trend in new export business remained “robust”, most of the new work was won domestically. “Although the rate of improvement in foreign demand eased from July’s near-record high, it remained among the strongest seen since new export orders data were first collected in January 1996,” IHS Markit found.

A stronger manufacturing sector also led to more jobs, with the rate of increase in employment the fastest since June 2014. Rob Dobson, director at IHS Markit, said: “The UK manufacturing sector continued to show signs of solid progress during the third quarter, with rates of expansion in output, new orders and employment all gathering pace in August. The key question is whether this positive start to the second half of the year can be sustained.”

Mike Rigby, head of manufacturing at Barclays, warned: “The benefits of a weak sterling and an improving global economy, as well as the continuing support from domestic demand, won’t necessarily have the desired effect.”