MANUFACTURING activity grew in October at its fastest rate in almost two years, boosted by a growth in new orders, according to a leading survey published yesterday.
The CIPS/Markit purchasing managers’ index (PMI) showed activity surge to 53.7, well above the 50 level that indicates growth. The survey marks a return to expansion for the stricken manufacturing sector, which had unexpectedly contracted slightly in September.
The growth was fuelled by a sharp rise in the new orders balance, which is at its highest level in nearly six years. There were also reports of firms moving closer to restocking following a sustained period of inventory depletion.
David Noble, chief executive at the Chartered Institute of Purchasing and Supply, said: “It appears that the manufacturing sector has turned a corner and is starting to pull itself out of recession.”
“However, the sector has been so hard hit since the recession began that it will be a long time before it returns to its previous level. Manufacturing is still fragile and will be highly vulnerable for some time to come,” he added.
Rob Dobson, senior economist at Markit, agreed, but stressed that caution remained the watchword for the sector. “Job losses are still running at a fast rate and cost pressures are starting to re-emerge. The recent PMI data may represent a positive first step on the road to recovery but the track back is likely to be long and uncertain,” he added.
The PMI data raises hopes for the manufacturing sector, which saw a shock drop in production in the third quarter according to official data.