UK manufacturing hits ‘three year high’

Source: Supply Chain Digital

Date :01/08/2007 11:48:11

British manufacturing activity unexpectedly picked up in July to its fastest pace in three years, the key CIPS/NTC survey showed today.

The Chartered Institute of Purchasing and Supply/NTC purchasing managers' index rose to 55.7 last month from an upwardly revised 54.7 in June. That was the highest since July 2004 and compared with City forecasts of 54.0.

Any reading above 50 indicates expansion and the sector has now grown for 24 successive months.

Factory gate inflation also hit its highest since the survey began in 1992 while input price inflation rose at its fastest rate in almost a year.

The figures are likely to alarm the Bank of England's monetary policy committee (MPC) which has been concerned about manufacturing firms' renewed pricing power.

However, the MPC is not expected to raise interest rates again tomorrow with global financial markets in such an anxious state.

It is thought that domestic demand is driving the gains as new exports orders grew at the slowest rate since the start of the year. New orders overall, however, rose at their fastest pace in 13 months.

Manufacturing employment rose for a seventh successive month with firms creating more jobs than at any time in the past three years.

The survey contradicts a similar one recently from the CBI which showed British factory orders fell in July at their fastest rate since the start of the year.

The CBI survey had been taken as the first sign that higher interest rates and the strength of sterling were beginning to hit the industrial sector, but analysts may now be forced to rethink.

August 1 2007