Textiles, clothing and food and drink manufacturers have lead an upsurge in the UK's manufacturing industry

Manufacturing records strongest growth since 2011

British manufacturing recorded its strongest growth in more than two years in June and new orders rose even faster.

The fresh sign of momentum in the economy has been revealed by the latest Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) figures, which have jumped to 52.5 from an upwardly revised 51.5 in May beating analysts' forecasts for a reading of 51.5.

The index is now at its highest level since May 2011, and the average level in the March-June period represented the strongest growth in manufacturing since the second quarter of 2011, when Britain's economy was expanding.

It was the third consecutive month of gains from a sector that has proved a drag on growth through the downturn, boosting hopes that Britain's factories are recovering.

Markit said every sector of manufacturing reported gains in June, with the strongest growth in textiles and clothing, and food and drink, but employment was broadly unchanged in June as companies paused on hiring new staff.

Rob Dobson, senior economist at Markit, says manufacturing has made "positive strides on the recovery path" and suggests the sector expanded by 0.5 per cent in the second quarter.

This is welcome news to Mark Carney, who starts as governor of the central bank today, who will be seeking to speed up Britain's exit from almost two years of economic stagnation, though no action is expected at his first policy meeting, which ends on Thursday.

Dobson adds: "Taken with recent signs of service sector strength and a stabilising construction industry it paints a picture of UK economic growth picking up from the opening quarter's 0.3 per cent to at least 0.5 per cent.

"It therefore seems increasingly unlikely that the Bank of England's policymakers will opt for further asset purchases at its meeting later this week."

Manufacturers reported solid demand from Europe, China, North America, Scandinavia and the Middle East. Firms attributed surging new work to improved confidence among clients, better weather and new product launches.

Costs declined for the third straight month in June, reflecting falls in the price of chemicals, feedstock, metals, packaging and plastics. Firms passed these on in lower prices of goods - the first fall in factory gate prices for three and a half years.

Manufacturers also spent more on bolstering their stocks of goods and levels of finished goods fell for the 15th successive month.

David Noble, chief executive of the Chartered Institute of Purchasing & Supply, says: "Momentum is building in manufacturing as the sector begins to work up a head of steam.

"Employment is the one disappointing spot, showing little change from last month; a reminder of the anxiety that still exists in the sector."

The Bank of England's Monetary Policy Committee (MPC) meets on Wednesday and Thursday to decide on interest rates and whether to increase the £375bn quantitative easing programme.

James Knightley, economist at ING Bank, says the data should ensure this week's MPC meeting is a "non-event".

"It looks as though the private sector is on a strengthening trend and the UK can post respectable GDP growth," he adds. "It also makes the prospect of any extra stimulus in coming months look less and less likely."

Samuel Tombs, UK economist at Capital Economics, says: "For now, then, it seems as if the UK's recovery is gathering some steam."

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