FACTORIES in the UK are still reporting that their businesses are expanding, now at the fastest pace in nearly three years, indicating another positive contribution to GDP growth in the fourth quarter.
Last month, new orders and production for British manufacturers grew at the fastest rate recorded in 19 months, suggesting that the industry is still going from strength to strength.
The jobs market for manufacturing firms is also warming up, with the best employment indicator since May 2011, according to the latest purchasing managers’ index (PMI) from Markit and the Chartered Institute of Purchasing and Supply (CIPS), released yesterday.
The headline figure for UK manufacturing hit 58.4 last month, higher than any other country in the EU, adding to industry body EEF’s expectation that the sector will grow faster than the rest of the economy generally during 2014.
Berenberg’s chief UK economist, Robert Wood, added that the bank now expects GDP growth in the fourth quarter to match the third quarter’s 0.8 per cent. Wood continued: “The UK’s recovery is mostly domestic, driven by very loose monetary policy and declining uncertainty. The UK domestic economy is likely to outpace most of its competitors over the next couple of years so dramatic reductions in the trade deficit seem unlikely.”
The pound rallied against the euro as the robust indication was revealed yesterday morning, rising to just above €1.21, during the day, and trading around 0.26 per cent up last night.