Manufacturing recovery aided by strong export orders

Manufacturing output grew at its fastest pace in almost 16 years during April amid signs of recovering exports, an industry survey showed today.

The Chartered Institute of Purchasing and Supply's (CIPS) latest activity index - where a reading over 50 indicates growth - reached 58 last month, the strongest since September 1994.

The recovery was aided by the sharpest growth in new business orders since January 2004 and the biggest jump in new export orders in the history of the survey.

CIPS chief executive David Noble said the results were "hugely encouraging" for the manufacturing sector.

"It is now growing at a rate of knots - maintaining the momentum gained in the first quarter and faring much better than we could have dared hope for this time last year," he added.

Today's survey represented the seventh successive month of improvement after the sector was mauled by recession.

CIPS said the export boost, helped by a weaker pound, reflected improving global conditions, restocking and promotions, with increased demand from customers in China, the Middle East, the US and mainland Europe.

Employment among manufacturers is also growing at its fastest rate since February 2007 after the dramatic cost-cutting seen in the past two years, the group added.

Mr Noble said: "The real turning point will come when manufacturers feel confident enough to increase their investment and start to build capacity again. The good news is there are already signs this is starting to happen."

After a disappointing 0.2% advance for the struggling UK economy in the opening three months of 2010, the CIPS survey adds to hopes that the recovery will pick up pace this year.

Vicky Redwood of Capital Economics said: "The balance is still consistent with impressive quarterly gains in manufacturing output of close to 2%."

But the EEF manufacturers' organisation warned: "The outcome of the election and the market reaction to it remain the big unknown on the horizon."

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