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Manufacturing grows but markets are underwhelmed

 

Ben Chu
Thursday 02 January 2014 22:29 EST
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Britain’s manufacturers continued their impressive growth last month, according to the latest survey snapshot of the sector, but the financial markets were underwhelmed by the reading.

The latest Purchasing Managers’ Index (PMI) compiled by Markit/Cips rose came in at 57.3 in December, with any figure above 50 signalling expansion. The PMI has been in positive territory for nine successive months.

However, the index was weaker than the 58.1 reading for November (itself revised down from the earlier estimate), and was fractionally below analysts’ expectations. That miss sent sterling down against the dollar, with the pound falling by 0.73 per cent to $1.644.

Rob Dobson of Markit said the latest reading was consistent with the manufacturing sector recording growth of 1 per cent in the final quarter of 2013. That would mark an acceleration on the 0.8 per cent expansion in the third quarter.

David Noble of Cips added: “UK manufacturing ended 2013 on a high and with all signs of powering ahead into 2014.” However, he also sounded a note of caution over inflationary pressures in the sector, noting that input price inflation hit a 28-month high last month.

Despite growing through most of last year, manufacturing output remains some 9 per cent below its level attained in the first quarter of 2008.

The manufacturing jobs index was robust, close to the two-and-a-half-year record seen in November. New export business also expanded again, with manufacturers pointing to rising demand from China, Russia and Brazil.

In the eurozone, manufacturing grew again in December with the Markit/Cips purchasing managers’ index registering 52.7 for the single currency zone, up from 51.6 in November. However, France slipped back into contraction.

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