Confidence among manufacturing exporters is at its highest level since comparable records began in 1996.
The Chartered Institute for Purchasing and Supply (Cips) said yesterday that its managers' index of sentiment on export orders in April had risen to 60.71. Any reading of 50 and above signifies expansion, and it is quite a turnaround from the recent low of 38.12, reached in November 2008, in the wake of the collapse of Lehman Brothers and a dive in world trade volumes.
The Cips data demonstrates both how far the world economy has come since the depths of the recession, but also the impact of the 25 per cent depreciation in sterling against a trade weighted index of foreign currencies since its peaks in 2007. That has taken longer than the Bank of England and the Treasury expected to feed through, but now seems to be making its presence felt.
Overall, taking into account the domestic market and employment prospects, business sentiment in the hard-pressed manufacturing sector is also close to a high. At 60.66, it is a shade below the 61.8 recorded in March but it has not been consistently at these sorts of levels for six years.
That may simply be a reflection of how demanding conditions have been during the downturn: about a million jobs have been lost in manufacturing. At 2.6 million, factory employment is at its lowest since the Industrial Revolution two centuries ago, and accounts for a smaller share of national income – 12 per cent – than in almost all of Britain's main competitors.
David Noble, the chief executive at the Chartered Institute of Purchasing and Supply, said: "This performance of the UK manufacturing sector is hugely encouraging as it is proving surprisingly resilient.
"The real turning point will come when manufacturers feel confident enough to increase their investment and start to build capacity again. The good news is there are already signs this is starting to happen as employment levels are slowly rising on the back of strained capacity and backlogs of work reported for the first time in over a decade."
Higher levels of total new work reflected improved global market conditions, client restocking and successful product promotions. Increased overseas sales were particularly commonly reported from exporters to China, mainland Europe, the Middle East, North America and Scandinavia.
The picture of gradual recovery was confirmed in the latest Report on Jobs from by the Recruitment and Employment Confederation and KPMG. This shows that permanent placements and temporary staff billings continued to rise "at marked rates", with faster increases in permanent salaries and temps' pay. But some of the improvements in the jobs market are coming at a slower pace than in March, reflecting weaker than expected claimant count figures recently.
However, Bernard Brown, partner and head of Business Services at KPMG, cautioned: "While the UK's gradual emergence from recession is starting to lead to better job prospects in the private sector, it is now becoming increasingly clear that the long-predicted public sector recession has started to hit the jobs market and therefore the upwards trend may come to a halt."Reuse content