02.01.2004

UK manufacturing growth at four year high

The results of the latest Reuters surveys show that both the UK and German manufacturing sectors grew strongly during December, with the UK reaching its highest levels since late 1999. This is the 10th consecutive month in which UK manufacturing output has increased according to the CIPS survey.

The growth occurred across all five manufacturing sectors, but was led by a strong surge in exports in spite of concerns regarding the low dollar.

The UK manufacturing industry has benefited from the strengthening of the Euro against Sterling, which has helped improve the competitive position of British exports into the Euro zone.

New export orders at 56 were only marginally off of November’s record 56.3, the highest level since the CIPS survey began eight years ago.

Manufacturing is also being helped by a continuing improvement in the overall UK economy, with an annualized growth rate of 3% based on Novembers revised numbers.

The manufacturing results are the first to be announced, but some early numbers indicate that the UK service company sector will show even stronger growth, particularly in respect to future orders expectations where the index rose to 79.1 up from 76.3 in November.

In the equivalent Reuters survey of manufacturing industry output in the Euro zone, the index rose to 54.4 up from 54.2 in November.

The German economy showed a rapid recovery after three years of stagnation, with new orders reaching a 38-month high. Once again exports helped boost the German result, in spite of a high Euro. A slackening pace of growth in France, Italy and Spain offset the German results within the Euro zone.

The CIPS index, is a seasonally adjusted comparative indicator, anything more than 50 signifies expansion.