Manufacturing jobs added at fastest rate since 2011

Tuesday 4 March 2014

With job growth now at its fastest pace in nearly three years in the manufacturing sector, it is a good time to be a limited company contractor.

The industry is strengthening and opportunities abound for workers. Momentum was maintained during February, according to the Markit/Chartered Institute of Purchasing and Supply (CIPS) Purchasing Manager's Index.

Jobs were added at the fastest pace since May 2011, with production and new business rising at above-trend rates.

The index stood at 56.9 last month, from a revised reading of 56.6 in January. This represents the 11th consecutive month of improved operating conditions in the sector.

Rob Dobson, senior economist at survey compilers, Markit: "The survey suggests we should expect another quarter of robust economic growth in the opening quarter of the year. The Manufacturing PMI ticked higher in February to provide welcome reassurance that the sector has weathered the storms and flooding in parts of the country during the month."

The domestic market is proving to be the driving force behind the manufacturing sector's recovery and production volumes increased for the 11th consecutive month.

So what's the reason behind this improved data? According to Markit and CIPS, companies are reporting promotional activity, new product launches and investment in new machinery as growth catalysts.

Increases in output were reported in consumer, intermediate and investment goods, as was growth in new orders and employment. This indicates that the positive upswing in the sector is broad-based.

"Capital goods producers reported the strongest output growth of the three market segments covered by our survey, and are still reporting some of the steepest gains in new work during the past two decades," Mr Dobson said.

"Maintaining this positive performance will be a key factor in achieving the long-awaited rebalancing of UK growth away from the consumer and financial sector and towards investment and exports."

New export businesses continued to grow last month but the rate of expansion eased from January. However, this was somewhat expected, as the first month of the year constituted a near three-year record.

Overall, inflows of new work strengthened from Europe, the US, China, the Middle East and Africa.

As new work increases, there have been signs of strain on the capacity of some firms. This has been highlighted by a slight gain in the backlogs of work during February.

Consequently, the need to grow headcounts has been noted. However, a lack of skills can often make this challenging for firms and this is where contractors need to step in.

Businesses are able to cover the cost of staff thanks to high demand. Indeed, increased work volumes have helped the pricing power of UK manufacturers. Average selling prices increased for the eighth consecutive month in February and at a greater pace than January.

Markit and CIPS claim this is the result of attempts to improve profitability and recover prior cost increases. This can be seen, the experts say, in the stagnant input prices recorded last month.

By Victoria McDonnell

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