Growth in exports and jobs ‘a great start to the year'
Britain's fragile economic recovery was given a boost after figures showed growth in the manufacturing sector hit a 15-year high last month.
The sector started 2010 in resurgent fashion, with new orders setting a multi-year high and employment growing for the first time in nearly two years, according to the Chartered Institute of Purchasing & Supply (CIPS).
Its monthly headline activity index, where a score over 50 registers growth, yesterday showed a reading of 56.7 in January — the highest level since October 1994.
The result, ahead of an upwardly revised 54.6 seen in December, was far better than expected. The ‘slight’ rise in employment also was also welcomed by CIPS. UK manufacturers have cut many thousands of jobs during the recession.
But the weak pound is providing a much-needed boost, with new export orders at their highest level since CIPS began collecting export data in 1996. This, combined with improvements in domestic demand, helped total new orders rise at the fastest pace in six years.
David Noble, CIPS chief executive, said the January result was ‘a great way’ to start the year. “Although the manufacturing sector represents a smaller proportion of total UK GDP than 10 or 20 years ago, it is still a very important part of the economy. It is therefore encouraging to see such strong growth and it suggests we are coming out of recession much quicker than previously feared.”
However, Jonathan Loynes at Capital Economics stressed manufacturing output still had a long way to go. “January's CIPS report on manufacturing offered hope that the industrial recovery is gathering momentum, but there are major uncertainties over the outlook for the overall economy over the coming quarters,” he said.