UK manufacturing continues to recover

Tue, 1 Dec 2009

The Chartered Institute of Purchasing & Supply (CIPS)/Markit Purchasing Managers’ Index for November has shown that the UK manufacturing sector is continuing to recover, but at a slower pace than the previous month.

Output rose for the sixth consecutive month in November, as market conditions continued to improve. Gains in production were broad-based across the consumer and intermediate goods sectors, while output at investment goods producers showed little change for the second month in a row. SMEs and large-sized enterprises both reported growth.

November data indicated that total new orders rose for the fifth successive month, with gains recorded in both the domestic and export markets.

New export business rose at the fastest pace for almost two years, reflecting an increase in new work from clients in mainland Europe, the US and Asia. There were reports that the weak sterling exchange rate was boosting competitiveness overseas.

However, there were signs that growth of the manufacturing sector may be nearing its peak. Rates of expansion in output and new orders were slower than October’s highs, and the cyclically sensitive orders-to-inventory ratio fell to an eight-month low.

David Noble, chief executive at CIPS, says: “After surviving one of the deepest downturns in recent memory, the manufacturing sector has slowly but surely started to grow again and conditions are looking decidedly less sickly than at the start of the year.

“However, the extent to which output fell during the recession means that the growth is coming from a particularly low base and there is a long way to go before we can say the sector has returned to full health.”