British Manufacturing Sector Booms & Pound Gets a Boost
Not only has the British pound hit its highest rates against the US dollar in almost six years, a new PMI survey suggests that in June, the manufacturing sector in the UK had grown at its fastest rate in seven months.
At the time of writing, the pound had risen to $1.7168 and continuing to rise, while against the euro the pound was also seen to increase, this time to €1.2564.
A PMI (purchasing managers’ index) is calculated from the results of a survey, in this case carried out by finance specialists Markit in conjunction with the Chartered Institute of Purchasing and Supplying (CIPS). The PMI is an indicator on how the economy for a particular country is doing based the polling data of businesses in the private sector.
The latest survey for the UK’s manufacturing sector suggested that the PMI had increased from 57.0 in May to 57.5 the following month, which is its second-highest it has been in three years, and also the fastest it has risen in more than half a year – in a PMI survey, a reading of over 50 indicates expansion.
The survey results only add to the conclusion that the UK’s economy is continuing to balance itself out for the better.
According to the latest official GDP figures, the economy grew by 0.8% in this year’s first quarter, and despite manufacturing output actually cooling down slightly in its rate of growth in June, it had still increased for its 16th consecutive month.
“UK manufacturing continued to flourish in June,” explained Markit Senior Economist Rob Dobson, “rounding off one of the best quarters for the sector over the past two decades.”
Mr Dobson added that with rising levels of production and orders from clients both in the UK and overseas, job creation had accelerated to its own highest levels in more than three years. Medium and small manufacturing companies appear to be mainly responsible for the rising levels of employment in the sector, though it is also true of larger firms, performing well enough to consider expansion and needing to hire more staff to support such growth.
“Sustaining the recovery will remain the key,” Mr Dobson concluded, stating that the better the sector does in regards to performance, the greater employment rates will also be able to rise, and the economy can better itself even further. “[It] bodes well not just for manufacturing,” he said, “but for sustaining the broader economic upturn as well.”