A good first day for Mark Carney as UK manufacturing output hits 25-month high

New figures will ease pressure on Mr Carney to pump more stimulus into the economy

New Bank of England governor Mark Carney was handed a first-day gift today as the steepest surge in manufacturing activity for more than two years fuelled hopes over growth.

Manufacturing output surged to a 25-month high of 52.5 in June, above the 50 mark which separates growth from contraction, the Markit/CIPS purchasing managers' index (PMI) showed.

That was solidly above economists' expectations for a minor gain on May's reading, and will ease pressure on Mr Carney to pump more stimulus into the economy. May's 51.3 reading was also revised higher to 51.5.

It was the third consecutive month of gains from a sector that has proved a drag on growth through the downturn, boosting hopes that Britain's factories are recovering.

Production rose at its fastest rate since April 2011 and new business hit highs last seen in February 2011. Domestic market conditions and overseas demand both strengthened.

Markit said every sector of manufacturing reported gains in June, with the strongest growth in textiles and clothing and food and drink. However, employment was broadly unchanged in June as companies paused on hiring new staff.

Rob Dobson, senior economist at Markit, said manufacturing has made “positive strides on the recovery path” and suggests the sector expanded by 0.5% in the second quarter.

He said: “Taken with recent signs of service sector strength and a stabilising construction industry it paints a picture of UK economic growth picking up from the opening quarter's 0.3% to at least 0.5%.

“It therefore seems increasingly unlikely that the Bank of England's policymakers will opt for further asset purchases at its meeting later this week.”

Manufacturers reported solid demand from Europe, China, North America, Scandinavia and the Middle East.

Firms attributed surging new work to improved confidence among clients, better weather and new product launches.

Costs declined for the third straight month in June, reflecting falls in the price of chemicals, feedstock, metals, packaging and plastics. Firms passed these on in lower prices of goods - the first fall in factory gate prices for three and a half years.

Manufacturers also spent more on bolstering their stocks of goods and levels of finished goods fell for the 15th successive month.

David Noble, chief executive of the Chartered Institute of Purchasing & Supply (CIPS), said: “Momentum is building in manufacturing as the sector begins to work up a head of steam.

“Employment is the one disappointing spot, showing little change from last month; a reminder of the anxiety that still exists in the sector.”

The Bank of England's Monetary Policy Committee (MPC) meets on Wednesday and Thursday to decide on interest rates and whether to increase the £375 billion quantitative easing programme.

James Knightley, economist at ING Bank, said the data should ensure this week's MPC meeting is a “non-event”.

“It looks as though the private sector is on a strengthening trend and the UK can post respectable GDP growth,” he added.

“It also makes the prospect of any extra stimulus in coming months look less and less likely.”

Samuel Tombs, UK economist at Capital Economics, said: “For now, then, it seems as if the UK's recovery is gathering some steam.”

PA

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
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 General

Recruitment Genius: Home Care / Support Workers

£7 - £10 per hour: Recruitment Genius: This care provider is looking for Home ...

Recruitment Genius: Web Team Leader

£30000 - £35000 per annum: Recruitment Genius: One of the UK's leading web des...

Recruitment Genius: Client Manager

£27000 - £35000 per annum: Recruitment Genius: A growing, successful, friendly...

Recruitment Genius: Property Negotiator - OTE £20,000+

£16000 - £25000 per annum: Recruitment Genius: This family owned, independent ...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate