Manufacturing expansion sustained at fastest rate since 1994

Rob Dobson, senior economist at Markit and author of the UK Manufacturing PMI said: "Although production remains well below pre-recession levels, the sector is now recovering its losses at a surprisingly rapid pace. The PMI suggests that output growth this quarter should at least match the first quarter gain of 1.2 per cent reported by the official figures. "This rapid growth is stretching capacity, leading to a survey-record increase in backlogs of uncompleted orders. The good news is that this encouraged employers to boost staffing levels again, and a strong rise in orders for plant and machinery suggest that companies are also boosting their investment spending. "However, although growth was driven by a combination of robust demand from domestic customers and a strong export performance, both of these sources of new orders may disappoint as we move into the summer. Austerity measures announced in the UK may cool home demand, while export sales may be hit by the sovereign debt crisis in our largest trading partner the Eurozone." Commenting on the report, David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: "The strength of recovery of the UK manufacturing sector has taken everyone by surprise – this time last year, the industry was on its knees. While the turnaround so far this year is obviously good news, we can't forget this has been driven in large part by the weak sterling exchange rate bolstering export demand."