Manufacturing mounts comeback as PMI hits 49.5

The surge to within a whisker of the 50 benchmark of growth was driven by solid order books in August said the Chartered Institute of Purchasing & Supply (CIPS)/Markit. Export orders remained robust despite weak demand for Europe. Raw material costs fell for a third successive month reflecting dwindling plastic and metal prices, CIPS/Markit said. However, the results should be tempered by the continued fragile global economic picture said experts. David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply commented: "We can take consolation from August's figures in that they were 'less bad' than the disastrous month before. We have witnessed a return to the status quo of flat growth in a fragile economy." Rob Dobson, senior economist at Markit and author of the Markit/CIPS Manufacturing PMI added: "The August readings for production and new orders do little to change the underlying picture of a fragile sector facing enormous headwinds. Overall demand remains too lacklustre to provide an imminent and sustained recovery." Overall manufacturing production was down for August, figures revealed. However, the decline was far less severe than July and centre on the investment goods sector. Consumer goods producers enjoyed a boost in output, figures showed. Mark Lee, head of manufacturing at Barclays commented: "Against all expectations the sector performed well in August, providing a boost to sentiment as we leave a challenging summer. However, the eurozone crisis continues to cast a shadow over the industry, and until our key European export destinations stabilise, UK manufacturers will find growth hard to come by."