PMI at 16-year high as export growth continues

Standing at 58.0 in November, its highest level since September 1994, it was up from a downwardly revised figure of 55.4 in October (previously reported as 54.9). The PMI has now remained above the neutral 50.0 mark for 16 months running, indicating sustained growth. The report highlights that faster growth of output and new orders led to survey record job creation, but that cost pressures rose sharply, amid widespread raw material price increases. "The UK PMI surged to a 16-year high in November, confounding the consensus forecast of weaker growth," said Rob Dobson, senior economist at Markit and author of the UK Manufacturing PMI. "The stand-out number was the survey record increase in employment, raising hopes that job creation in manufacturing can play a wider role in broadening and sustaining the economic recovery. Output and new order inflows also picked up sharply, and exports rose at a solid clip after a mid-year lull, priming manufacturing and overseas trade to be pillars of Q4 GDP growth. "This is welcome news, as the rebalancing of the economy away from consumption towards exports represents a key part of the coalition's growth strategy, and comes at a time when stronger manufacturing expansion may well be needed to offset a likely slowdown in consumer spending as austerity measures start to bite." David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply said: "This month's PMI brings some early Christmas cheer for the UK manufacturing sector, particularly the record-breaking growth in employment figures. The reported increase in purchasing activity based on strong new orders points to ongoing recovery and renewed confidence. "The pickup in export markets continues to expand as customers look to replenish their inventories, building on the momentum gained last month and a step along the way to realigning the UK economy. "Whilst this is good news for manufacturers at the end of what has been a rollercoaster year, the next few months will be far from an easy ride. Persistent cash flow pressure has led to falls in suppliers' stock over time – compounding disruption in supply chains and resulting in longer delivery times. Increased purchasing activity is also adding to input cost inflation, which is likely to continue rising for the foreseeable future."