UK manufacturing keeps up strong growth rate in May

Jun 03, 2014

British manufacturing activity kept expanding at a rapid pace in May, a survey showed on Monday, suggesting the economic recovery has lost little of its shine this quarter.

The Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) inched down in May to 57.0 from 57.3, but stayed far above the 50 line that divides growth from contraction. That reading matched the consensus forecast of economists polled by Reuters.

New orders piled in at a healthy rate and manufacturers took on more staff, albeit at a slightly slower pace than in April.

Survey compiler Markit said manufacturing production is expanding at a quarterly rate close to 1.5 percent, although the sector is still around 7.5 percent smaller than its pre-crisis peak.

"Sustaining the rebound and continuing to push towards rebalancing the UK economytowards manufacturing therefore remains critical. On those scores the latest survey provides some real positives," said Rob Dobson, senior economist at Markit.

The survey pointed to subdued price pressures, with factory output prices rising at the slowest rate since last August, and input prices slipping for a fourth consecutive month.

"As manufacturing only makes up a small share of the UK economy, around 10 percent, these positive data are unlikely to shift the Bank of England on to the path of normalising monetary policy on their own," said Dobson.

The BoE's Monetary Policy Committee meets this week to set policy. While no-one polled by Reuters expects a change to policy on Thursday, economists predict at least one policymaker will vote to raise interest rates from their record low of 0.5 percent by August.

Source: REUTERS UK