Food and clothing manufacturers lead the way in glowing PMI data

Domestic market conditions improved further, while demand from overseas also strengthened, helping the average PMI reading over the second quarter as a whole (51.4) post its highest since the second quarter of 2011. The latest expansion was broad-based, with all of the industry's sub-sectors signalling increases in June. The strongest rates of growth were recorded by the Textiles & Clothing and Food & Drink categories. New orders rose for the fourth consecutive month in June with manufacturers reporting solid demand from domestic markets and clients based in Europe, China, North America, Scandinavia and the Middle East. A number of companies linked improved inflows of new work to strengthening confidence among clients and consumers, better weather conditions and the launch of new product lines. Nevertheless, manufacturing employment was broadly unchanged in June. The cost of raw materials declined for the third straight month in June, reflecting lower costs for chemicals, feedstock, metals, packaging and plastics. There were reports of exchange rate factors reducing the sterling price of some imported inputs. Average factory gate prices fell for the first time in three-and-a-half years in June, mainly due to strong competition. Lower selling prices were also linked to reduced input costs. Rob Dobson, senior economist at survey compiler Markit said the short-term outlook for output remained "on the upside". He continued: "Job creation is still weaker than hoped for, but this should improve if solid demand growth is sustained and eats into spare capacity." CIPS CEO David Noble said: "Momentum is building in manufacturing as the sector begins to work up a head of steam," but also acknowledged that employment was "the one disappointing spot … a reminder of the anxiety that still exists in the sector. The swell in order books and increased levels of purchasing activity however, signal that the subdued labour market trend may be shortlived".