Number of jobs in manufacturing rises for 30th successive month

Nick Elvin

Manufacturing employment rose for the 30th successive month in October, as improved new order intakes and efforts to clear backlogs of work encouraged firms to raise capacity.

That’s one of the findings in the latest Markit/CIPS Purchasing Manager’s Index (PMI), which showed that in October, the UK manufacturing sector recorded its best month of output growth since June 2014. The PMI rose to a 16-month high of 55.5, up from the 51.8 posted in September, representing one of the steepest rises registered during the 24-year history of the survey.

October saw solid improvements in the rates of growth in output and new orders, in both cases the sharpest since the middle of last year. The domestic market remained the prime source of new contract wins, while back-to-back increases in new export business were signalled for the first time since the third quarter of 2014. Companies saw improved intakes of new work from clients in the Middle East, East Asia and the USA. These factors led to large-scale producers reporting a robust increase in staffing levels, although SMEs saw little change in employment since September.

Rob Dobson, senior economist at survey compilers Markit, said: “The start of the final quarter saw UK manufacturing spring back into life and record its best month of factory output growth since June 2014. The revival provides a tentative suggestion that the manufacturers are pulling out of their recent funk, having been dogged by recession since the start of the year, and may help boost economic growth in the fourth quarter.

“Based on historical comparisons, the survey is consistent with a quarterly rate of growth of around 1%, a vast improvement on what we have seen in recent months. The big question now is whether this bounceback is a one-off or the start of a sustained re-emergence from recession.

“The ongoing strength of the domestic market and a welcome improvement in new export orders led to a broad-based upturn in production of consumer, intermediate and investment goods. The revival of overseas sales is a particularly encouraging aspect of the latest survey, helping to dispel fears that global demand is slumping and boding well for the outlook.

“However, scratching further beneath the surface of the data reveals that the upturn is largely confined to the biggest manufacturers, who also benefitted most from the better export sales. Small and medium-sized firms will also need to join in the recovery to help prevent the upswing from faltering.”