Job creation in manufacturing at highest rate for three years

Hiring in factories picked up at its quickest pace since May 2011, according to the latest Markit/CIPS Manufacturing Purchasing Managers’ survey.

The employment index rose as companies struggle to meet growing demand with their existing capacity.

Manufacturing accounts for around a tenth of Britain’s economy.

“The survey suggests we should expect another quarter of robust economic growth in the first quarter,” said Rob Dobson, senior economist at Markit.

The survey received mixed reactions from Yorkshire manufacturers.

George Kilburn, clerk to the Company of Cutlers, said: “There is a pick-up. Things are moving forward.

“There is a reticence to investing significantly, but people are starting to get round that.

“The fact is it’s not racing ahead very quickly, which is not necessarily a bad thing.

“Overall people are feeling more confident. The pick-up is growing steadily which makes it more sustainable.”

But Peter Birtles, group director at Sheffield Forgemasters, said: “Despite the recent findings of the PMI report, Sheffield Forgemasters is continuing to trade through an order book of circa £100m, but we are not yet seeing any general recovery.

“As a ‘late cycle’ market dependent company this does not surprise us.

“Our markets are still generally quiet and our working environment is still very difficult.

“As a 70 to 80 per cent export dependent company with 100 per cent of our competition coming from overseas, it will be recovery in the major world economies which will benefit us – not the UK economy and our trade in the UK is yet to show any increase.”

Mr Birtles warned that the perceived recovery and growth in the UK could actually be a threat to UK manufacturing.

“This is attributable to renewed increasing pressures posed by expectations of higher wage levels and consistently escalating energy costs faced by UK manufacturers compared to their European competitors,” he said.

The index ticked up to 56.9 from 56.6 in January, higher than the 56.5 expected by economists. Readings above 50 point to growth in activity.

British manufacturing expanded faster in February than anywhere else in Europe.

The survey suggested manufacturers were mostly undamaged by the floods that have submerged swathes of south-west England.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The February purchasing managers survey indicates that while manufacturing activity may have lost a little momentum compared to the peak levels seen in late 2013, it is performing well in the first quarter of 2014 and is well on course for further healthy growth.

“There are no references in the survey to manufacturing activity being affected significantly by the flooding.

“The survey also adds to the evidence that business investment is increasingly kicking in to support growth, but there are signs that a strong pound is having some dampening impact on manufacturers’ export orders although they were still decent in February.”

The better-than-expected result marks a return to form for the sector after a slight dip in the reading for January. New export business also posted a solid gain in February.

However, the rate of increase eased from January’s near three-year record.

Manufacturers reported improved new orders from clients around the world, including Europe and China.

Underpinning the rise in employment were signs of strain on the capacity of some firms, reflecting a slight gain in backlogs of work during the month.

Markit senior economist Rob Dobson said the survey pointed to another quarter of robust economic growth in the first quarter of the year.

“The manufacturing PMI ticked higher in February to provide welcome reassurance that the sector has weathered the storms and flooding in parts of the country during the month,” he said.

“Growth of production and new orders lost only a little momentum and are still rising at above trend rates.”

[email protected]