Sterling’s weakness has provided UK firms with a timely boost, new figures have suggested.
The manufacturing sector has grown at its fastest rate for 15 years, helped by an upturn in exports.
The pound has fallen in value against a basket of other currencies by as much as a quarter during the economic downturn.
But sterling’s weakness has given the UK’s exporting manufacturers a welcome impetus and this may increase as uncertainty in the debt markets leads to a further weakening of sterling.
The Markit/Chartered Institute of Purchasing and Supply’s latest exporters’ index rose to 60.7 in April – anything above 50 marks expansion – with new export orders accelerating at their fastest pace since 1996.
Sentiment in the broader manufacturing community also appears to be on the up, with the headline CIPS index hitting 58, up from 57.3 in the previous month, its highest since 1994, and with order books at their fattest for six years.
Rob Dobson, senior economist at survey compilers Markit, said: “The data point to manufacturing output growing by as much as 2 per cent in the latest three months, suggesting the sector will provide a strong contribution to second-quarter gross domestic product.
“The sheer strength of the rebound in demand for manufactured goods is highlighted by an unprecedented increase in backlogs of work, the largest for at least 11 years, which in turn has encouraged manufacturers to raise staffing levels to the greatest extent for three years. The feeding-though of rapid output growth to job creation is particularly good news, and bodes well for the sustainability of the UK economic recovery.”David Noble, the chief executive at the CIPS, said: “This performance of the UK manufacturing sector is hugely encouraging as it is proving surprisingly resilient.
“The real turning point will come when manufacturers feel confident enough to increase their investment and start to build capacity again. The good news is there are already signs this is starting to happen as employment levels are slowly rising on the back of strained capacity and backlogs of work reported for the first time in over a decade.”
“We are seeing a localised increase in demand, as evidenced by enquiries, but this has yet to translate into direct hiring and after a busy March, April was quiet and the recruitment evidence alluded to has yet to ring true with us and suspect many have been putting off decisions until the political landscape is clear.”, says Chris Slay of Skills Provision.
Devaluation remains one of the options to reflate the economy although the Politicians would never admit it.
Author: Peter Arkwright
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