Manufacturing sector buoyed by near record export growth

The UK manufacturing sector was boosted by almost record growth in new export orders, according to the latest CIPS index.

The strongest rise in new export orders since April 2010 contributed to an improved flow of new work that buoyed the sector in July. Increases in input were also at their lowest in more than a year.

The IHS Markit/CIPS UK manufacturing PMI rose to 55.1 in July, up from a three-month low of 54.2 in June. A score above 50 signifies growth, while a score below contraction.

The sector had a positive outlook, with nearly half (49%) of buyers surveyed expecting production to be higher in a year’s time. Only 5% predicted contraction. This was attributed to new product launches, expansion into new markets and investment into new capacity, as well as stronger exports.

Duncan Brock, director of customer relationships at CIPS, said the “powerful” rise in new export orders came as the biggest surprise. “The weak pound and improving global economic conditions from North America to Asia-Pac resulted in more business for the UK,” he said.

The domestic market also stayed resilient, he added.

Increases in new orders and output helped job growth in the sector. Staffing levels increased for the twelfth consecutive month and the pace of expansion in July was one of the strongest in the last three years.

Production in the sector increased for the twelfth month in a row, and while the rate slowed to its lowest since March, it was still above recent averages. The strongest increase in output came from consumer goods.

However Brock warned that this prolonged expansion could be putting a strain on supply chains.

“Delivery times were stretched to the biggest extent since May 2011, and suppliers struggled to provide a number of key materials such as rubber, aluminium and some chemicals,” he said.

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