Manufacturing in Britain experienced a surge in growth during August as large numbers of new orders from Europe and the U.S. helped support the sector, showed the latest reading of the PMI from statistics generator HIS Markit.
Manufacturing in Britain had a reading for August of 56.9, which was up from July’s 55.3, and ahead of the reading or 55 shown in a flash estimate during August.
The reading of the PMI, which is between 0 and 100, measures the sector’s activity, anything that is higher than 50 signals there has been a growth in the sector, while anything less means there was contraction.
All five of the components of the PMI, new orders, output, employment, delivery times and inventories remained consistent with stronger performance for the industry during August, showed a statement released by IHS Markit.
Sterling, which is close to 13% lower compared to its level before the Brexit referendum vote versus the dollar, has been an important driver in UK manufacturing resurgence, since June, and that was the same for August.
Companies linked their gains in new exports to the increased business from the U.S., China, mainland Europe and Australia. The weakness of historic proportion in the exchange rate of sterling was reported to have increased competitiveness in exports.
An analyst in London said that market forces had continued be supportive of the manufacturing sector during August as purchasing activity remained strong, additional jobs were created and new orders increased in each of the three sectors, for companies both small and large.
Buoyed by a rebound in demand domestically, the overall performance of the sector was one of the best since 2014.
New export orders were strong with new orders arriving from the U.S. and Europe, which supported the fast rise in hiring by the sector since June of 2014.
While the numbers at a glance look strong for manufacturers in Britain, an economist has warned there should not be over optimism, especially when doing a comparison between the Eurozone and Britain.
He added that the manufacturing sector should be even better, due to the huge depreciation of sterling and the emergence of the eurozone’s strong recovery.
The Purchasing Manager’s Index or PMI for the UK continued below that of the Eurozone’s which is 57.4 for the fourth straight month.
Additionally, optimism by manufacturers regarding future growth in production edged up slightly during August to its average of five years.