UK manufacturing steamed ahead in May, beating expectations

 
Emma Haslett
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UK manufacturing beat expectations in May (Source: Getty)

The UK's manufacturing sector stayed strong in May, buoyed by a weak pound, new figures have shown.

Markit's purchasing managers' index for the sector hit 56.7 in May, down slightly from last month's 57.3, but higher than expectations of 56.5. Any figure above 50 denotes growth in the sector.

Both production and new orders increased at above-average rates, with both the domestic market and exports increasing steadily.

Employment in the sector rose for the 10th month in a row, rising by its fastest since June 2014 as manufacturers increased their capacity thanks to larger backlogs of work.

However, inflation in input costs was "elevated" in May, although they fell from recent highs.

Read more: British manufacturing output rises at fastest pace since 2013

Today's survey came in sharp contrast to figures published by the Office for National Statistics last month, which showed production across the UK's industrial sector (which takes into account energy production as well as manufacturing) shrank 0.5 per cent in March.

"The strong PMI numbers suggest the manufacturing sector has gained growth momentum in the second quarter after the sluggish start of the year," said Rob Dobson, senior economist at IHS Markit.

"The ongoing strength of the domestic market remains the main driver of the upturn. Growth of new export business played a lesser role in comparison, with the trend in foreign demand continuing to improve only in fits and starts, despite the assistance of a historically weak sterling exchange rate."

However, Dave Atkinson, UK head of manufacturing at Lloyds' commercial banking arm, added a dip in consumer spending may hurt manufacturers.

“At home, there are more challenges as firms are facing inflationary pressures and a slow-down in consumer spending," he said.

The pound stayed steady on today's news, hovering just below $1.29.

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