Today Markit/CIPS Purchasing Managers Index for the manufacturing sector leapt to 49.1 in November, the highest level recorded for four months.
Although the figure continues to linger below the 50 mark which separates growth from contraction it is a vast improvement on the figure recorded last month.
In October manufacturing PMI was negatively revised to 47.3 and economists only forecast a slight increase for November. The median estimate of surveyed economists came in at 48.0 and even the most optimistic prediction of 48.9 fell short of the mark.
This development will no doubt form part of Chancellor of the Exchequer George Osborne’s arsenal as he defends his controversial austerity plans once more on Wednesday while he keeps Parliament abreast of his budget strategy. However, although on the surface this is good news for the UK economy, industry experts are urging caution and warning that the sector remains in a wobbly situation.
Despite the stronger-than-predicted 49.1 figure, and an improvement from October of 0.2, new orders remained in contraction for a second consecutive month while new export orders fell for the tenth month this year.
Manufacturers also jacked up their prices at the most rapid pace for five months and factories slashed their workforce.
Rob Dobson, Markit’s senior economist, commented: ‘Purchasing managers have provided the Chancellor with some better-than-expected news on the performance of the manufacturing economy ahead of the Autumn Statement. However, the sector is merely stabilising […] The renewed recession in the Eurozone and sluggish growth further afield clearly remain big worries for UK producers […] at the same time, demand in home markets remains frustratingly weak.’
As of 10:15 am
The Pound to Euro exchange rate is currently trading at 1.2315
The Pound to US Dollar exchange rate is currently trading at 1.6052
The Pound to Australian Dollar exchange rate is currently trading at 1.5410
The Euro to US Dollar exchange rate is currently trading at 1.3033
The Euro to Pound exchange rate is currently trading at 0.8120