Manufacturing continues fast growth in May

At 57.0 in May – slightly down from the 57.3 recorded in April (a five-month high) – the PMI has now signalled an improvement in overall operating conditions in each month since March last year. Rob Dobson, senior economist at Markit, said: "The revival of UK manufacturing continued in May, as the sector basked in one of its brightest growth spells of the past two decades. Manufacturing production is currently expanding at a quarterly rate close to 1.5%, according to the PMI, helping the sector take huge strides towards recouping the output lost during the recession. "However, with manufacturing still some 7.5% smaller than its pre-crisis peak, even at this current growth rate it would take until late-2015 to achieve full recovery. Sustaining the rebound and continuing to push towards rebalancing the UK economy towards manufacturing therefore remains critical. On those scores the latest survey provides some real positives." Manufacturing production increased for the 15th successive month in May, reflecting improved order books and stronger economic conditions. The recovery remained broad-based, with marked expansions of output and new orders registered across the consumer, intermediate and investment goods sectors. Investment goods producers saw an especially marked acceleration in the rate of increase in new orders, representing a positive bounce following slower demand growth in March and April. New export orders rose for the 14th consecutive month in May. Companies reported improved demand from the US, Asia, Canada, Europe, the Middle East and New Zealand. Where an increase was signalled, this was linked to new product launches and efforts to increase market share. Manufacturing employment increased for the 13th month running. Jobs growth was broad based across consumer, intermediate and investment goods producers and at SMEs and large companies. With both employment and output rising, manufacturers reduced the level of work in hand at their factories for the third month in a row. Neil Prothero, deputy chief economist at EEF, the manufacturers' organisation, said: "Despite the headline number edging marginally, lower manufacturing remains in strongly positive territory and well above the index long-term average, underlining the important role being played by industry in the UK's continuing recovery. "The sector is firmly on track to expand for a fifth consecutive quarter, its strongest performance in four years. Signs of a pick-up in export orders are especially welcome, as the broader rebalancing story still requires a significant boost in net trade to support the recent rebound in business investment."