Manufacturing PMI hits 16 year high

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The Purchasing Managers’ Index for manufacturing rose to a sixteen year high in December as strong export growth pushed rates of expansion in output and new orders to the highest since May.

Job creation also stayed close to the November high, the Markit/CIPS survey revealed.

[asset_ref id=”654″]  David Noble

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said: “The start of 2011 is likely to be all systems go for UK manufacturing, with December’s PMI demonstrating a huge turnaround of fortunes compared with two years ago. The accelerated growth of new orders in export markets and recent survey record rates of increase in manufacturing jobs are a positive end to the year. They also bode well for a continuation of the manufacturing-led economic recovery next year.”

And Rob Dobson, senior economist at Markit and author of the UK Manufacturing PMI, said: “The latest data are consistent with manufacturing production rising at a quarterly rate close to 2.0 per cent, which should generate a meaningful contribution from the sector to economic growth in the fourth quarter to offset likely weakness in other sectors. All of this points to manufacturing being a positive spur to economic recovery in the final quarter.

“On the downside, the other stand-out figure was a survey record increase in average input costs. Manufacturers in sectors such as clothing, food products and chemicals were hit hard by demand exceeding supply for certain key inputs, as well as rising energy costs. The hawks on the Bank of England’s Monetary Policy Committee will be further unnerved by these rising price pressures.”

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