New figures show that UK manufacturing grew faster than expected in February, driven by a strengthening domestic market, an increase in new product launches and investment in new machinery. Added to this, employment in the sector expanded at its fastest pace in almost three years over the month.
The Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) rose to 56.9 in February from 56.6 the month before, the 11th consecutive monthly rise and higher than the 56.5 expected by most analysts. Meanwhile, job creation in the industry reached a 33-month high and the survey suggests that the sector can expect another quarter of robust growth.
Calling the results a “mini renaissance in manufacturing”, the Chartered Institute of Purchasing & Supply (CIPS) said that British manufacturers have been “remarkably resilient”, given the pressure of a rising pound dampening growth in export orders and with the fear of an interest rate rise by next spring.
Signs of a jobs recovery in manufacturing increase the chances of the Bank of England hitting its 7 per cent threshold for considering interest rate rises, although it recently broadened the focus of its forward guidance policy towards a wider assessment of spare capacity as it tries to gauge when the recovery will feed into inflation.
However, recent data has shown signs of a long-hoped-for rebalancing, as business investment and exports boosted the wider economy in the fourth quarter.
Combined with strong mortgage lending data from the Bank last week, the figures show that the broad economic recovery remains on track and is likely to feed into strong GDP growth for the first half of this year, fuelling speculation that a rate rise is not too far way.