Some welcome economic news as manufacturing sector shows growth

 

The new year kicked off with some welcome news on the economy as figures revealed activity in the manufacturing sector surged to a 15-month high in December.

The latest Markit/CIPS purchasing managers' index (PMI) showed a headline reading of 51.4 in December, marking a return to growth for the first time since March and the highest reading since September 2011.

Manufacturers were boosted by increased demand from British firms, which helped output from the sector rise at the fastest pace for 20 months, offsetting an ongoing slump in orders from the crisis-hit eurozone.

The closely-watched survey suggests the manufacturing sector contracted overall in the fourth quarter despite the December recovery, but experts said it raises hopes that manufacturing output has stabilised.

Howard Archer, chief European & UK economist at IHS Global Insight, said the manufacturing improvement may also help the wider economy avoid an end-of-year contraction.

"The marked pick-up in manufacturing activity in December is a significant boost to hopes that the economy was at least flat in the fourth quarter and could even have grown marginally," he said.

The December reading comes after a difficult year for Britain's manufacturing sector, which has suffered as demand from the UK's main export partner, the eurozone, has been hit by economic troubles.

The average PMI reading in the fourth quarter remained below the no-change level of 50 - which separates expansion from contraction - but higher than that seen in the third quarter and above the average over 2012 as a whole.

Manufacturers warned the sector was not out of the woods yet, with economic uncertainty continuing to hang over the UK and Europe.

Lee Hopley, chief economist at manufacturers' organisation EEF, said: "The rise in output and orders at the end of last year is a positive signal that the sector can continue to recover in the year ahead, but the strength of that recovery will, as ever, depend on what happens in other parts of the world.

"2013 is likely to remain challenging and exporters, in particular, will be hoping to see stability in the eurozone and signs that demand will continue to hold up in the US and emerging economies in the coming months."

The Markit/CIPS survey showed there were signs of spare capacity, with another decrease in backlogs of work last month.

There was also some worrying inflation indicators, with output prices from the manufacturing sector rising at its fastest rate since April.

Employment in the sector fell for the eighth month running in December, but the rate of job losses was the least marked for four months.

This offers hope the UK's labour market could carry over its "surprising resilience of 2012 into 2013", according to Mr Archer.

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before