1
Dec
UK manufacturing growth 'hits 16-year high'
The UK's manufacturing sector grew at its fastest rate for 16
years in November, a closely-watched survey suggests.
The purchasing managers' index (PMI) climbed to 58, compared
with a revised rate of 55.4 in October, well ahead of analysts'
expectations.
The figure was boosted by record growth in manufacturing jobs,
said data firm Markit, which helps compile the survey.
It said the strong growth was timely given the government's
spending cuts.
An index reading above 50 indicates expansion.
The strong data, and similarly encouraging manufacturing figures
from around the world, particularly China, helped to push UK shares
higher.
The FTSE 100 index was up 109 points, or 2%, at 5,637 in mid
afternoon trading.
Growing exports
"The UK PMI surged to a 16-year high in November, confounding the
consensus forecast of weaker growth," said Rob Dobson at
Markit.
"The stand-out number was the survey record increase in
employment, raising hopes that job creation in manufacturing can
play a wider role in broadening and sustaining the recovery."
The government has stressed the need for exports to play a
greater role in future economic growth, particularly in light of
its austerity measures that are expected to hit consumer
spending.
Manufacturing currently accounts for about 13% of the UK's total
economic output.
'Hugely encouraging'
Manufacturing production rose in November at its fastest pace since
May due to higher demand in the UK and overseas, Markit said.
However, it added that cost pressures had also increased sharply
as inflation continued to rise.
Analysts were particularly upbeat following the survey.
"It's a very strong outcome," said Philip Shaw at Investec.
"It may well be that we are beginning to see a bigger rise in
exports which could lead to a rebalancing of the economy. It's
hugely encouraging."
Howard Archer at IHS Global Insight described the survey as
"superb".
"The data are particularly welcome news as it is vitally
important that the UK recovery is on as firm a footing as possible
before the fiscal tightening really starts to bite from early 2011,
starting with January's VAT hike."
Source: http://www.bbc.co.uk/news/business