The latest Markit/CIPS purchasing managers' index (PMI), which surveys more than 600 businesses, reports that the pace of manufacturing growth hit a 16-year high in November, with factories recruiting at the fastest rate since the PMI began in 1992.
The index now stands at 58, up from 55.4 in October. With an index reading above 50 indicating expansion, British manufacturing seems to be making itself at home in growth territory.
And the record increase in recruitment also backs up expectations that the private sector will be able to replace the 330,000 public sector jobs now expected to be lost over the next four years.
These positive results are timely. It was only on Monday that Chancellor George Osborne said the UK was moving from a debt-based economy to one that invests and exports and part of the upward surge in manufacturing was due to increased demand overseas.
The health of the manufacturing sector also helps to strengthen the UK recovery as we prepare for the increase in VAT in January and the full impact of the cuts announced in October’s Spending Review make themselves felt.
Taken with the construction PMI due today and the services PMI due tomorrow, these results could be a significant indicator of just how firm the UK’s economic footing is as we gear up for the challenges of 2011.
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