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UK Manufacturing sector in August 2013 sees output growing at fastest rate for nearly two decades

4th September 2013
UK Manufacturing sector in August 2013 sees output growing at fastest rate for nearly two decades
UK Manufacturing sector in August 2013 sees output growing at fastest rate for nearly two decades
Is it possible that the British manufacturing downturn may finally have ‘bottomed-out’ after witnessing the strongest growth in the produce in the past two decades in Aug-13?  The UK manufacturing sector, which had been dragging-its-heels on the road to recovery for a very long time, has now positioned itself for solid economic recovery after a roaring upsurge in its Aug-13 numbers.
The ‘booming’ activity in the Britain’s manufacturing sector increased for the fourth month in a row thanks to rising demand from domestic customers and euro zone growth.  The diligently monitored Markit/ CIPS UK Manufacturing Purchasing Managers' Index (PMI) managed to reach 57.2 in the process of clocking-up its best performance since Feb-11.  Any PMI reading crossing the 50 mark is considered to be an indicator of growth in a particular sector.
Additionally, the amount of new orders increased at their strongest pace since August 1994, which is a clear sign of robust economic recovery.  As far as the UK government is concerned, Chancellor George Osborne will be hoping that these ‘bullish’ figures will further cement their prognosis that the economic medicine he prescribed has indeed been working as he forecast it would and that industry is on track to achieve sustainable recovery and grow its once powerful industrial base with an GDP growth by a better-than-expected 0.7% in the second quarter.  Howard Archer, chief European and UK economist at IHS Global Insight, said the “hugely encouraging” survey fuelled hopes that overall GDP in the third quarter could be higher than the 0.6% seen in the last period.
New Governor of the Bank of England, Mark Carney, will no doubt be pleased that he has appeared on the scene at this particular moment in the cycle, as his limited time in office has materialised at the moment when pleasing economic ‘green-shoots’ are seen to be emerging.  Carney will doubtless be looking to ensure that there is no back-sliding or return to inflationary pressures on his watch, if at all possible.  As in all else, timing is everything and if this increasingly positive output is sustained, then Carney may well find himself under early pressure to consider a rise in interest rates?
It is generally believed that it is thanks to Bank of England guidance, that the broader business picture shows greater emphasis on job creation with companies creating more jobs for the fourth consecutive month; in truth, the jobs situation has only improved slightly with employers still showing an understandable caution but there may be even better times ahead.
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