Employment in Britain’s factories grew at its fastest pace in almost two-and-a-half years last month as manufacturing activity remained near August’s 19-year high, a key survey showed.
Giving the Chancellor a boost, UK manufacturing is now estimated to have expanded by between 1pc and 1.5pc in the three months to September, according to economists, the fastest rate of growth for the industry since the middle of 2010.
Rob Dobson, senior economist at Markit, said: “These numbers are encouraging in respect to the rebalancing of the economy, with goods production likely to provide a major stimulus to growth in the third quarter.”
The economy picked up by 0.7pc in the three months to June and is thought to have put in an even better performance between July and September. Manufacturing activity in September was 56.7, according to the closely-watched purchasing managers index (PMI), where any reading above 50 signals growth.
Although lower than August’s 57.1, the reading remained close to last month’s two-and-a-half year high. Measures of output and new orders also stayed around to August’s 19-year records. With activity picking up, factories started hiring more aggressively.
The jobs measure jumped from 51.9 to 54, its highest since the mini-boom in early 2011. Manufacturing crashed back into recession in 2012, but began growing again in the first half of this year.
However, it remains about 10pc below pre-crisis levels. Lee Hopley, chief economist at EEF, the manufacturers’ organisation, said: “This is another solid month for manufacturing with output, orders and employment all up, paving the way for a decent quarter of growth across the sector.
The good run of indicators should continue beyond the end of this year with some expansion in manufacturing taking place in Europe, Asia and the US."The latest recovery has been driven by domestic demand.
Exports were disappointingly weak given the 20pc devaluation in sterling since 2007. Growth in new export business was slower than it has been since May. Economists also raised concerns about the third consecutive month of accelerating output prices, due largely to three months of sharply rising input costs, which could stoke inflation.
“With the input prices balance remaining above the 50 no-change mark for the third successive month, rising costs present one potential impediment to growth in the sector,” Capital Economics’ Martin Beck said.
James Knightley at ING Financial Markets said rising inflationary pressures and strong job growth would persuade the Bank of England to raise interest rates earlier than 2016.
“Price pressures appear to be growing as output prices are at two-year highs with firms able to pass on rising input costs and expand margins at the same time,” he said.
“So with both the employment and inflation components pointing to the upside it will reinforce market expectations of monetary policy tightening coming in early 2015.”
telegraph.co.uk
Giving the Chancellor a boost, UK manufacturing is now estimated to have expanded by between 1pc and 1.5pc in the three months to September, according to economists, the fastest rate of growth for the industry since the middle of 2010.
Rob Dobson, senior economist at Markit, said: “These numbers are encouraging in respect to the rebalancing of the economy, with goods production likely to provide a major stimulus to growth in the third quarter.”
The economy picked up by 0.7pc in the three months to June and is thought to have put in an even better performance between July and September. Manufacturing activity in September was 56.7, according to the closely-watched purchasing managers index (PMI), where any reading above 50 signals growth.
Although lower than August’s 57.1, the reading remained close to last month’s two-and-a-half year high. Measures of output and new orders also stayed around to August’s 19-year records. With activity picking up, factories started hiring more aggressively.
The jobs measure jumped from 51.9 to 54, its highest since the mini-boom in early 2011. Manufacturing crashed back into recession in 2012, but began growing again in the first half of this year.
However, it remains about 10pc below pre-crisis levels. Lee Hopley, chief economist at EEF, the manufacturers’ organisation, said: “This is another solid month for manufacturing with output, orders and employment all up, paving the way for a decent quarter of growth across the sector.
The good run of indicators should continue beyond the end of this year with some expansion in manufacturing taking place in Europe, Asia and the US."The latest recovery has been driven by domestic demand.
Exports were disappointingly weak given the 20pc devaluation in sterling since 2007. Growth in new export business was slower than it has been since May. Economists also raised concerns about the third consecutive month of accelerating output prices, due largely to three months of sharply rising input costs, which could stoke inflation.
“With the input prices balance remaining above the 50 no-change mark for the third successive month, rising costs present one potential impediment to growth in the sector,” Capital Economics’ Martin Beck said.
James Knightley at ING Financial Markets said rising inflationary pressures and strong job growth would persuade the Bank of England to raise interest rates earlier than 2016.
“Price pressures appear to be growing as output prices are at two-year highs with firms able to pass on rising input costs and expand margins at the same time,” he said.
“So with both the employment and inflation components pointing to the upside it will reinforce market expectations of monetary policy tightening coming in early 2015.”
telegraph.co.uk
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