Manufacturing growth hits highest level in 18 years

A man works on the production line at the Toyota factory in Derby, central England, March 7, 2011.

November's Nikkei/IHS Markit Manufacturing Purchasing Managers' Index rose to 52.6 from 50.3 in October, above all forecasts in a Reuters poll which had predicted a more modest rise to 51.0.

Sterling rose briefly against the dollar after the PMI showed surging orders at home and from Europe's recovering economy.

"In the fourth quarter, the economy is likely to maintain the stability observed since the start of the second half of the year".

Higher inflation - largely due to the fall in the pound after the Brexit vote last year - has pushed up costs for households and businesses this year, contributing to Britain's lagging economic performance compared with European peers.

"The PMI's gauge of new order volumes showed the recent expansion in sales accelerating in November, resulting in the largest monthly increase so far this year", Aw said.


Looking at margins, the rate of input cost inflation quickened to a seven month high, with this latest rise attributed to increased raw material costs, including for aluminium, paper and plastics.

While Friday's PMI will make welcome reading for policymakers, Britain's economy relies far more on the services sector, which is almost eight times larger than manufacturing. Any reading above 50 indicates expansion in the sector.

The latest rise in new orders was one of the strongest in the survey's history, while growth in new export orders firmed to the sharpest in nearly three years.

Although weaker than the long-run average, new business growth accelerated to a 13-month high in November.

Manufacturing association EEF highlighted the strong growth in the European and global economies as positives for British manufacturers.


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