Manufacturing export growth hailed

Manufacturing export growth reached a near three-year high in January as the sector continued its strong pace of growth into the new year.

New order growth came from North America, mainland Europe, Asia, Brazil, Scandinavia and the Middle East.

However the reading of 56.7 for the sector as a whole on the closely watched CIPS/Markit purchasing managers' index (PMI) survey - where the 50 mark separates growth from contraction - marked a three-month low, down from 57.2 in December.

While the overall figure was lower than expected it was still above average and new exports were at their highest level since February 2011, while jobs increased for the ninth month in a row.

The first month of this year saw factories churn out more goods in response to improved domestic and overseas demand.

David Noble, chief executive at the Chartered Institute of Purchasing and Supply, said: "The continued improvement in global market conditions has ushered in a broad based and fully fledged recovery in manufacturing.

"Sustaining growth close to November's near record numbers, the makers' march continued in January, embodied by ever faster rates of new business growth and ongoing increases in employment levels.

"Whilst domestic demand continues to climb, it is the expansion overseas that promises continued growth.

"The illusive export market has long been heralded as the key to unlock UK economic growth and in manufacturing appears to be coming to fruition, with new business rates climbing fastest in nearly three years."

Markit economist Rob Dobson said the sector had continued the robust upsurge in production seen at the tail end of 2013, with the broad-based improvement being felt at small business and large-scale producers alike.

"Although the pace of output expansion has cooled slightly in recent months, growth is still tracking at one of the highest rates in the 22-year survey history," he said.

He said the jobs growth added to the prospect of unemployment soon falling to its 7% threshold - when policy makers will begin to consider an interest rate rise.

Mike Rigby, head of manufacturing at Barclays, said: "2014 has started in the same upbeat way for manufacturers as last year finished with increasing confidence across the sector.

"A growing economy, record low interest rates, stable input prices and foreign exchange rates are providing manufacturers with a steadier platform upon which to perform."

James Knightley of ING Bank said: "The UK manufacturing PMI has dipped a touch, but is still consistent with very strong growth."

He said the figures were consistent with a gross domestic product growth forecast of 3% and boosted hopes of investment spending picking up and driving recovery over coming years.