Although the pace of UK factory output slowed in July, it is continuing to enjoy one of its strongest growth periods for 22 years as it steps up to meet strong demand, according to research firm Markit.
The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) showed that the pace of growth in July slipped to its lowest level in just over a year edging down to 54.4 from 57.2 the previous month. In addition, new export order growth was the slowest in four months, falling to 53.9 in July from 55.6 in June. Any figure over 50 indicates expansion.
However, economists believe that manufacturing will continue to be a positive factor in the UK’s economic recovery and is continuing to erode spare capacity, meaning that it can still make a good contribution to overall growth in gross domestic product (GDP) in the second half of the year.
EEF, the manufacturers’ organisation, was also not too concerned about the downward drift in the PMI reading, saying that it is still consistent with forecasts for overall manufacturing growth this year and pointing out that the UK remains the strongest performer in Europe.
Meanwhile, a spokesman for Markit commented that UK manufacturing had begun the third quarter on a firm footing, as production and new orders both continued to rise at robust, above long-run average rates.
There are concerns that the crises in the Ukraine and Middle East could weaken demands for export to key European markets, while signs of price increases and capacity pressure in the supply chain could also pose risks.