Data collected 12-26 November 2013 Key points:
Manufacturing PMI at 58.4 in November
Fastest job creation since May 2011
Production and new order growth at, or near, 19-year highs
Summary:
November saw the already solid upturn in the UK manufacturing sector gain further momentum. At 58.4, from an upwardly revised reading of 56.5 in October, the seasonally adjusted Markit/CIPS Purchasing Managers Index® (PMI®) rose to its highest level since February 2011. Moreover, the PMI has signalled expansion for eight months running.
The improved performance of the sector largely reflected substantial increases in both manufacturing production and new orders, with rates of growth in both at, or near to, 19-year highs. The upturn also remained broad-based, with all of the sub-sectors covered by the survey reporting increases in output and new business. The domestic market remained the prime pillar of new order growth.
Companies also benefited from rising levels of new export orders in November. Although the rate of growth in overseas demand was less marked than Octobers 32-month high, it was still among the steepest registered post the global financial crisis.
There were reports of improved inflows of new work from Asia, the USA, Germany, France, Ireland, Belgium and the Middle East.
The outlook for the manufacturing sector remained positive during November. Companies reported further stock depletion, with the rate of reduction in post-production inventories one of the sharpest during the past three-and-a-half years. This took the new orders-to-finished goods inventory ratio to a survey-record high, suggesting that production growth will be maintained in the coming months.
The ongoing recovery at manufacturers encouraged further job creation in November. Employment rose for the seventh consecutive month, with the rate of increase accelerating to a two-and-a-half year record. The latest jobs growth was broad-based, with payroll numbers rising in all of the sub-sectors covered by the survey and across small, medium and large sized enterprises.
November saw average input costs increase for the fifth month in a row, as manufacturers were hit with higher raw material and utilities prices. Moreover, the rate of inflation accelerated to a three-month peak.
Companies reported some success in passing on higher input costs to clients. Average output prices also rose for the fifth month running and at the steepest pace in over two years.
Rob Dobson, Senior Economist at survey compilers Markit said: UK manufacturing continued to hit the high notes in November. The Manufacturing PMI struck a fresh two-and-a-half year peak as production and new orders rose at, or close to, 19-year record rates. The sector is on course to beat the 0.9% increase in output seen in the third quarter, with the quarterly pace of growth so far in the final quarter tracking comfortably above the 1.0% mark.
It also looks as if the strong recovery in the sector is translating into meaningful job creation.
Manufacturing employment rose at the fastest pace since May 2011, signalling that companies are currently creating around five thousand jobs per month.
Sustaining the recovery remains the key and the news here is also positive. The manufacturing expansion remains broad-based by sector, demand from the domestic market continues to surge higher and new export orders are rising at a clip close to Octobers 32-month high. The intermediate goods sector was the stand-out performer overall as many firms refilled depleted warehouse shelves, but marked growth at consumer and investment goods producers also suggests that household and capital spending will both be positive spurs for broader economic growth. Manufacturing and the wider economy are therefore both on course to build on the third quarters solid foundation.
David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply added: Manufacturing recorded an all-round glowing performance in November, as continued growth in production and new orders saw rates at, or close to, 19 year highs. Success was consistent across all three sectors of the market and resulted in the biggest jump in employment levels in two and a half years. Improved confidence and positive macroeconomic conditions, both in the UK and abroad, complete a positive outlook as we close the year.
The sectors solid growth was primarily underpinned by a strong domestic market, boosting new business in the UK and giving manufacturers the confidence to look ahead to the future. This was coupled with new export orders from key overseas markets accelerating at one of the fastest rates since the financial crisis.
"The industrys ongoing recovery has given rise to a substantial expansion in purchasing activity but similar to previous months, the sector is still experiencing some shortages, particularly in raw materials, implying that supply chains still have some catching up to do with the market. With good signs that growth will be maintained, suppliers go into the New Year with more opportunities than the challenges of previous years.
Made in the Midlands Director Charles Addison concluded: "There is clear evidence of the strength of the domestic market in terms of new orders. Although exports are rising, the potential and opportunity to mirror this trend in global markets in 2014 will be huge."
The December 2013 Report on Manufacturing will be published on Thursday 2nd January 2014 at 09:30.