Manufacturing sector continues robust recovery

Manufacturing production continued its upward surge during April, with the rate of expansion remaining robust and hitting an eight-month high. Growth improved across the consumer, intermediate and investment goods sectors, as companies responded to rising new order inflows, new product launches and efforts to clear work backlogs. The rate of expansion in incoming new work remained elevated in April, accelerating to a three-month high. Growth of new orders was attributed to improved demand from both domestic and export markets. Meanwhile, the level of new business from overseas rose for the 13th successive month, reflecting stronger inflows of new work from North America, Europe, Asia and the Middle-East. The ongoing upswing in the sector's performance also resulted in further job creation at manufacturers during April. Employment rose for the 12th consecutive month, with the rate of increase identical to February's near three-year peak. Rob Dobson, senior economist at survey compiler Markit, said: "UK manufacturing continued its surging start to 2014, with output growth accelerating in April to a level among the highest signalled over the past two decades. This places the sector perfectly to build on the robust 1.3% expansion in manufacturing production reported by the first estimate of Q1 GDP... "Supporting these efforts are a strong domestic market and improving global economic conditions, while the ongoing solid upswing in employment is providing the capacity to meet the needs of demand looking ahead. The PMI survey suggests that manufacturers are creating jobs at a pace of around 10k per month at present." However, he added: "The one sour point in the latest data is a further sharp slowdown in growth of investment goods new orders, a blow to hopes of achieving a rebalancing away from consumer-driven economic expansion. The hope is that demand for investment goods will pick up as broader economic conditions continue to rebound." Neil Prothero, deputy chief economist at EEF, said: "Manufacturing's upturn is continuing apace with a rebound in productivity, solid job creation and above-average real wage gains across the sector highlighting the vital role being played by industry in the UK's continuing recovery. "The domestic market remains the dominant driver of manufacturing activity, although there are some encouraging signs from a rise in export flows that the gradual revival in Eurozone demand is beginning to feed through to manufacturers' order books. "We anticipate a gradual strengthening in the global growth picture as the year progresses with manufacturing growth of at least 3% in 2014, the fastest rate of expansion in four years."