Factories in the UK and US return to growth in July
BRITISH manufacturing activity grew in July for the first time since March 2008 due to the fastest rate of growth in new orders since November 2007, yesterday’s CIPS/Markit manufacturing purchasing managers’ index (PMI) said.
The survey showed a rise to 50.8 from 47.4 in June, and above the critical 50 level that separates expansion from contraction, indicating a return to stability for the sector and the economy as a whole.
Rob Dobson, senior economist at Markit, said: “The turnaround signalled by PMI data during 2009-to-date has been remarkable. But the base of the recovery remains broad, which should help with sustaining gains into the fourth quarter.”
The new orders component of the PMI jumped to 55.9 from 49.8, suggesting that the improvement reflected more than just an easing in the rate of destocking.
ING strategist James Knightley said: “This suggests that the UK economy is likely to record positive growth through the rest of this year and into next. However, ongoing deleveraging and rising unemployment still suggests that the recovery will be fragile.”
Across the Atlantic, the US ISM manufacturing survey surged to 48.9 from 44.8, leaving it at a level consistent with GDP growth of 1.5 per cent at an annualised rate. In the Eurozone, manufacturing activity hit an 11-month high of 46.3 driven by a restocking of intermediate goods, such as steel.