LONDON (Reuters) - British manufacturing grew at its strongest pace in almost three years in November and employment in the sector jumped, adding to signs the country’s economic upturn is gaining momentum, a survey showed on Monday.
The Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) jumped to 58.4 in November from an upwardly revised 56.5 in October. Index readings above 50 indicate expansion.
The index was at its highest since February 2011 and exceeded the highest forecast in a Reuters poll.
It adds to signs that Britain’s economy is finally getting back on its feet after the financial crisis, something Chancellor George Osborne is likely to stress when he delivers a half-yearly budget update on Thursday.
The employment subindex for the manufacturing sector leapt to 54.5, its highest since May 2011, from 51.9 in October, the survey showed.
“UK manufacturing continued to hit the high notes in November,” Markit economist Rob Dobson said. “It looks as if the strong recovery in the sector is translating into meaningful job creation.” He said British manufacturing companies are creating around 5,000 jobs per month.
Unemployment has fallen faster than the Bank of England expected, adding to doubts about how long its pledge not to raise interest rates will last.
The BoE has said it would only consider raising interest rates once unemployment fell to 7 percent but governor Mark Carney and other top policymakers have stressed that level is not a trigger and would not compel the Bank to act.
In the October-December period, manufacturing looked likely to outstrip its growth of 0.9 percent in the third quarter with a broad-based expansion, Dobson said.
A sub-index for new orders rose to 64.6 from 61.3, its highest level in more than 19 years. Exports had one of their best months since the financial crisis, helped by orders from euro zone countries.
Inflation pressures increased as utility costs rose, but large-scale manufacturers said they were able to raise their selling prices. Output prices rose for a fifth straight month.
Manufacturing groups have said they want the government to take action against the rise in power tariffs when it announces its half-yearly budget review this week.
A separate survey showed that expansion in manufacturing will outpace growth in the broader economy next year and higher confidence will translate into more recruitment and investment.
The survey by manufacturers’ organisation EEF and business advisers BDO, also released on Monday, forecasts the sector will grow by 2.7 percent in 2014, faster than 2.4 percent overall economic growth.
In the three months to September the British economy grew by 0.8 percent, its best performance in more than three years, helped by a 0.9 percent expansion in the manufacturing sector.
Reporting by Silvia Antonioli; Editing by William Schomberg and Hugh Lawson