Foreign orders boost for manufacturing

Manufacturing export orders grew at the fastest pace in more than two years in October, according to the latest snapshot of the sector.

The Markit/Cips survey of purchasing managers eased slightly to 56 in October, down from the 56.3 reading in September, but was still well above the 50 mark that separates growth from contraction.

The sub-index for export orders jumped to 56.5 from 53.6, its highest level since February 2011, with growing demand coming from Asia, the United States, Europe, the Middle East and Russia.

"A sharp uptick in inflows of new export business was also one of the big stories from the latest figures, signalling that the UK is no longer being left behind in the chase to benefit from improving global markets" Rob Dobson, a senior economist at Markit, said.

The news was less rosy for job seekers, with the pace of jobs growth in the manufacturing sector easing from September's 27-month peak, although it remained in line with average increases.

Inflation pressures also eased marginally, with increases in raw material costs and factory-gate prices slowing slightly, though they remain rapid by the standards of the past two years. More than one in 10 firms reported a rise in factory gate prices.

The overall index has now signalled growth for seven consecutive months. The Office for National Statistics estimates manufacturing output grew by 0.9 per cent in both the second and third quarters of the year and City economists expect further growth in the final quarter.

"So as far as we can tell at this early stage, it seems that manufacturing output in Q4 could grow by at least the 0.9 per cent rate registered in the third quarter and will therefore make another significant contribution to overall GDP growth," Samuel Tombs, of Capital Economics, said.

However, output from the sector, which accounts for a tenth of the economy, still remains some 9 per cent smaller than it was before the financial crisis.

China's manufacturers are also growing strongly, with the latest survey snapshot of the sector showing the fastest pace in 18 months.

The Chinese Purchasing Managers' Index rose to 51.4 in October from 51.1 in September, pointing to a stabilisation of the growth rate in the world's second-largest economy. The output sub-index was particularly strong, rising to 54.4 from 52.9.