Markit Group Limited, a provider of financial information services, released the latest Markit/CIPS Manufacturing PMI survey on Monday, which revealed that the UK manufacturing sector continued to grow during February 2014, with strong output and new orders.
Data from survey also showed that employment in the manufacturing sector has increased at the fastest pace since May 2011, with job creation reaching a 33-month record.
The survey was compiled by Markit and The Chartered Institute of Purchasing & Supply (CIPS), which represents procurement and supply professionals. It is based on replies to questionnaires sent to purchasing executives in over 600 industrial companies. Data for the latest Purchasing Managers’ Index was collected between 12 and 25 February 2014.
The seasonally adjusted Markit/CIPS Purchasing Manager’s Index (PMI) ticked higher in February, at 56.9. This reading was up from a revised reading of 56.6 in January and indicates that operating conditions have improved for eleven successive months.
A strong domestic market in the UK is reportedly helping to drive the manufacturing recovery, which corroborates with monthly rises in production volumes over the past eleven months. Promotional activities, new product launches and investments in new machinery were also linked to higher output. Manufacturers of consumer, intermediate and investment goods all reported robust increases in output, new orders and employment during February.
New export business was also shown to have increased in February, although the rate of increase slowed from the near three-year record in January this year. However, there was a bigger influx of new work from clients in Europe, the US, China, the Middle East and Africa.
Higher demand also gave further pricing power to UK manufacturers, with average selling prices rising for the eighth consecutive month. This increase is said to be a result of efforts to improve profitability and recover prior cost increases, with the latest figures showing that input prices were unchanged during February. Holdings of finished goods in February were lower for the fourth month and the rate of depletion was substantial compared to the previous survey period. Stocks of purchases also decreased, but at a moderate pace compared to January, as there was a marked increase in purchasing activity by UK manufacturers.
Rob Dobson, Senior Economist at Markit, commented: “The survey suggests we should expect another quarter of robust economic growth in the opening quarter of the year. The Manufacturing PMI ticked higher in February to provide welcome reassurance that the sector has weathered the storms and flooding in parts of the country during the month. Growth of production and new orders lost only a little momentum and are still rising at above trend rates. This mini-renaissance in manufacturing is also driving the sharpest job creation since the middle of 2011, which will support the broader economic recovery through improved consumer confidence and spending. The latest data also provide positive news on the investment-side of the economy. Capital goods producers reported the strongest output growth of the three market segments covered by our survey, and are still reporting some of the steepest gains in new work during the past two decades. Maintaining this positive performance will be a key factor in achieving the long-awaited rebalancing of UK growth away from the consumer and financial sector and towards investment and exports. ”