The UK’s manufacturing industry continued to grow in August 2013 as output and new orders in the sector rose at the fastest rate since 1994. August was the country’s fifth consecutive month of expansion, according to the Markit/CIPS Purchase Managing Index.
The country’s factories are booming, according to Markit senior economist Rob Dobson. This is fuelled by rising demand among the UK’s domestic customers and its largest trading partner, the eurozone.
“Manufacturing is making a strong positive contribution to the economy,” Dobson commented. “This is welcome evidence that the long-awaited rebalancing of the economy towards manufacturing and exports is starting to take place, now that our export markets are recovering.”
Those surveyed also linked increased sales volumes to confident clients – suggesting an improvement in the general economic climate. There was also strong demand for exports, with Brazil, Russia, India and China and the USA and Europe all reportedly showing signs of increasing demand.
However, manufacturers have expressed concern at the rising cost of raw materials, including oil, paper and timber, so it is not clear how long the current growth spurt will continue. Indeed, David Tinsley, UK economist at BNP Paribas, has cautioned that the sharp rise in input costs, driven by the price of oil, had the potential to cause concern.
Chief UK economist at Berenberg Bank, Rob Wood is optimistic and suggests that the growth may pressure the Bank of England into a faster-than-expected rise in interest rates. “This is a consumer led recovery with legs,” he says. “The improving export picture coming through in the latest surveys is the icing on the cake.”