LONDON: Britain’s factories enjoyed their fastest growth for three years last month on the back of strong demand at home and abroad, according to a survey that will temper worries about a Brexit-driven economic slowdown this year. The manufacturing sector, which makes up about a tenth of the UK economy, enjoyed the strongest pick-up in new work since the start of 2014 and smashed expectations in April. Firms also took on new workers at a faster pace and ramped up production, the closely watched Markit/CIPS UK Manufacturing PMI (pdf) showed. Its main barometer of business activity jumped to 57.3 in April from 54.2 in March. That confounded forecasts for a modest slowdown to 54.0 in a Reuters poll of economists. A reading above 50 shows growth while one below indicates it is contracting. The measure for manufacturing only briefly fell below that no-change mark in the wake of last June’s vote to leave the EU but then recovered along with readings for the construction industry and the much larger services sector.
The latest manufacturing report signalled that strong demand came from the domestic market as well as overseas, continuing a pattern of export support for UK firms from the weaker pound. Sterling’s sharp fall since the Brexit vote has made UK goods cheaper in foreign markets. But it has also raised the cost of imports. The survey of more than 600 industrial companies follows official figures last week showing the UK economy slowed markedly in the first three months of 2017 as the effect of higher import costs worked its way through the economy, raising inflation and squeezing consumer spending. But while some consumer-facing businesses have struggled, manufacturers have reported a boost from the weaker pound and from a recovery in the global economy. PMI surveys published earlier on Tuesday showed eurozone factory growth hit a six-year high in April.
