Saturday 24 February 2018

UK factory activity boosted by frail pound


Stock image: PA
Stock image: PA
Colm Kelpie

Colm Kelpie

UK manufacturing surged to a three-year high last month, highlighting the boost the weak pound is giving Britain's factories.

The Irish and European manufacturing sectors also enjoyed a strong month, with the latter appearing to shrug off the uncertainty posed by the French election, with activity increasing at the fastest rate for six years.

Rates of expansion in the UK sector in output, total new orders, and new export work all gathered pace, underpinned by strong business confidence.

In contrast to signs of weakening consumer demand in the UK as inflation rises quickly, new orders in the manufacturing sector poured in at the fastest rate since January 2014, while growth in orders from abroad was at a seven-month high, according to the latest Purchasing Managers Index for the sector.

"While the major political parties debate how best to leave Europe, British manufacturers have continued to increase their exports to the Continent," said Duncan Brock of the Chartered Institute of Procurement and Supply.

"A weaker pound has kept British products competitive on the world stage and encouraged the twelfth successive rise in manufacturing exports. The British manufacturing industry is moving at such a pace that's suppliers are struggling to keep up with demand."

The PMI produced by financial services information firm Markit rose to a three-year high of 57.3 in April, up from March's four month low of 54.2.

Meanwhile, the health of the Irish manufacturing sector improved markedly during April, helped by stronger expansions in output, new orders and employment.

Firms noted particular success in export markets during the month, according to the latest PMI survey report.

The seasonally-adjusted PMI report for the sector produced by specialist bank Investec rose to 55 last month, from 53.6 in March.

It was the strongest expansion in three months.

Philip O'Sullivan, Investec economist, said the data showed a bright start to the second quarter for the sector.

"One of the key highlights of the release is the New Export Orders index, which indicates the fastest rate of growth in overseas orders since July 2015. Firms continue to invest in providing additional resources to meet this rising client demand," he said.

Eurozone manufacturers began the second quarter at a blistering pace, increasing activity at the fastest rate for six years as demand remained strong despite rising prices.

IHS Markit's Manufacturing Purchasing Managers' Index for the eurozone jumped to 56.7 in April from March's 56.2, reaching its highest level since April 2011.

The figure was one tick down from a preliminary reading of 56.8.

Irish Independent

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