The UK's manufacturing sector shifted up a gear in November as a closely-watched index showed the sector was at a four-year high.
IHS Markit's purchasing managers' index (PMI) for the manufacturing sector jumped to 58.2 from an upwardly revised 56.5 in October, topping economists' expectations and hitting its highest level since August 2013.
The index indicated strong growth in the sector's output – any figure above 50 denotes growth – but the pound slid 0.5 per cent against the US dollar in late morning trading due to profit taking.
“UK manufacturing shifted up a gear in November, with growth of output, new orders and employment all gathering pace. On its current course, manufacturing production is rising at a quarterly rate approaching 2 per cent, providing a real boost to the pace of broader economic expansion," said Rob Dobson, director at IHS Markit.
Manufacturing production expanded at the fastest pace since September 2016 and to one of the greatest extents during the past four years, the survey said. Companies linked this to stronger inflows of new orders, reflecting solid domestic demand and steeper gains in new export business.
Dennis de Jong, managing director at UFX.com, said manufacturing output has been one of the few bright spots for the British economy since the Brexit vote, but he pointed out that it paled in comparison to manufacturing in the Eurozone, which was growing at its fastest rate in 17 years.
“Still, British economists need all the positives they can get, and with 'sufficient progress' in Brexit talks helping to boost the pound in recent days, traders will hope the continued improvement can give the beleaguered market some much needed momentum," de Jong said.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, added:
UK manufacturers are being swept along by the Eurozone’s resurgence—the single currency area’s PMI increased to 60.1, from 58.5 in October—but remain cautious about the outlook.
Manufacturers remain very cautious about the outlook and likely won’t invest enough to enable the current period of strong output growth to continue for long.