Markit/CIPS UK Manufacturing PMI figures released for May

Figure above the neutral mark for the 26th month in succession.

New figures from the latest Markit/CIPS UK Manfacturing PMI were released this morning with a rise in new orders and outputs reported in May.

The PMI, which is an indicator of the overall health of the manufacturing sector, is up to 52.0 in May, which is above the 50.0 figure that signals growth.

This has slightly improved from the 51.8 in April, though this was previously reported as 51.9. It means that the PMI is above the neutral 50.0 mark again – making it 26 consecutive months where this has been the case.

Although the intermediate goods sector has seen another decrease in output, today’s report showed consumer goods sector has continued to perform well. Investment goods producers also saw better results in May than in April.

Data for the report was collected between the 12th and 26th May, and another positive aspect was the performance of UK manufacturing production which saw a 27th consecutive monthly increase.

Following last month’s rate of new orders sliding to a seven-month low, May’s results showed an increase in these, with improved client confidence and domestic demand being attributed as reasons for this increase. New product launches have also had a positive effect.

The rate in growth of jobs rose slightly and is at its weakest level of increase since a rise in manufacturing employment started to be reported again. However, it should be pointed out that May’s small increase signified the 25th consecutive month that job growth has been reported.

Rob Dobson is the Senior Economist at Markit, who compiled the survey, and he said that the Government must invest further in manufacturing.

He said: “Expectations of a broad rebound in UK economic growth during the second quarter of the year are called into question by the readings. Manufacturing looks on course to act as a minor drag on the economy, as the sector is hit by a combination of the strong pound and weak business investment spending.

“The strength of sterling is a double-whammy for economic growth by constraining manufacturer’s export performance and also driving a surge in cheap imports.

“Where growth is being reported by manufacturers, this remains heavily dependent on the domestic market, and consumer demand in particular.

“The challenge therefore remains for the new Government to take the necessary steps to revive manufacturing, boost investment spending and improve export competitiveness if any headway is to be made on achieving the long promised rebalancing of the UK economy.”

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