LONDON (Reuters) - British manufacturing recorded its strongest growth in more than two years in June and new orders rose even faster, in a fresh sign of momentum in the economy just as the Bank of England gets a new governor.
The Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) jumped to 52.5 from an upwardly revised 51.5 in May, data showed on Monday, beating analysts’ forecasts for a reading of 51.5.
The index is now at its highest level since May 2011, and the average level in the March-June period represented the strongest growth in manufacturing since the second quarter of 2011, when Britain’s economy was expanding.
Rob Dobson, senior economist at Markit, said the survey suggests that factory output rose by around 0.5 percent in the second quarter.
After recent signs of strength in services and stabilisation in construction, it also points to overall quarterly economic growth of at least 0.5 percent compared with the January-March period, Dobson said.
“The near-term outlook for output also remains on the upside,” he added. “It therefore seems increasingly unlikely that the Bank of England’s policymakers will opt for further asset purchases at its meeting later this week.”
Mark Carney, who starts as governor of the central bank on Monday, will seek to speed up Britain’s exit from almost two years of economic stagnation. However, no action is expected as at his first policy meeting, which ends on Thursday.
The manufacturing output and new business components of the PMI index were at their strongest since the first few months of 2011, as appetite for British goods grew at home and abroad, including in Europe. Some firms said better weather helped, too.
Stocks of finished goods shrank in June as companies raced to meet strengthening demand, pointing to likely further growth of production in coming months, Markit said.
Factories’ clients also had something to cheer: Output prices fell for the first time since late 2009, driven down mainly by stiff competition.
Editing by Hugh Lawson