The UK manufacturing sector witnessed a rapid growth in output, export orders and employment in 2010, a recent survey has revealed.
The Purchasing Manager’s Index (PMI) published by consulting firm Markit, a barometer to measure industrial activity – has hit a sixteen year high in December recording a score of 58.3, up from November’s 57.5. A score above 50 indicates the sector is expanding.
The heavy snow and inclement weather that hit the country in December failed to slowdown the pace of the sector and the December quarter recorded the strongest growth.
Commending the performance of the sector Rob Dobson of Markit said: “The UK manufacturing sector saw a truly spectacular end to 2010”.
The sterling performance bodes well for the economy and gives rise to the hope that the private sectors rapid growth will more than offset the public sector and the government’s austerity measures.
Exports orders were growing at near record pace while production was highest in December since May 2010. Though employment growth slowed down a little compared to November, still it was well over the long term average and recorded a steady growth for nine straight months.
Hike in input and raw material prices however, remain a headache with input cost growth recorded highest since 1992. Although manufacturers are raising prices slowly, surging inflation may slow down demand in future.
“The hawks on the Bank of England’s monetary policy committee will be further unnerved by these rising price pressures”, Mr. Dobson said.
Bank of England figures suggested that housing prices continue to remain weak in November. New mortgage loans were recorded at a little over 48,000 – close to last six months average and nearly half the number before the crisis began.
Advances to smaller companies and loans to households grew at a slower pace. Though households and businesses are stepping up their repayments due to historically low rates, crisis hit banks are unable and unwilling to push loans faster.
The liquidity in the system grew by 3.5 percent, lower than the 6-9 percent the central bank had hoped to achieve after pumping £200 billion in the system.