Factory output level rises as exports surge

British manufacturers have rebounded from a growth slowing in June, thanks to global demand leading to a surge in exports, reports Markit’s UK factory PMI, which found a jump to 55.1 in July, from a three-month low point of 54.2 in June.

Rob Dobson, Director at IHS Markit, said the third quarter of 2017 gave manufacturers ‘a solid footing’: “UK manufacturing started the third quarter on a solid footing. The headline PMI signalled a growth acceleration for the first time in three months during July, as new order intakes were boosted by a near survey-record increase in new export business. Although the exchange rate remains a key driver of export growth, manufacturers also benefitted from stronger economic growth in key markets in the euro area, North America and Asia-Pacific regions.

“Continued expansion is also still filtering through to the labour market, with the latest round of manufacturing job creation among the best seen over the past three years.”

Lee Hopley, Chief Economist at EEF, the manufacturers’ organisation, said: “UK manufacturers appear to be riding high going into the second half of the year with the sector in the UK and Europe continuing to be buoyed by a recovering global economy, alongside efforts to bring new products to the market. Above trend responses across the key components of the survey would signal that the drag on overall economic growth from the sector in the second quarter of this year is likely to be temporary.

“While this is positive news for the UK’s growth outlook, at least in the short-term, it doesn’t make the Monetary Policy Committee’s balancing act any less tricky this week. Some comfort will, however, come from further signs that cost pressures on the supply chain are easing and the pass through to consumers should be on the wane.”

However, the data contradicts a more reserved assessment from the ONS which said output had slightly contracted from April to June.