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UK manufacturing PMI hits 13-month high-CIPS/Markit

Published 07/01/2009, 04:30 AM
Updated 07/01/2009, 04:40 AM

LONDON, July 1 (Reuters) - British manufacturing activity fell at its slowest pace in more than a year as output rose for the first time in 15 months, a survey showed on Wednesday.

The CIPS/Markit manufacturing purchasing managers' index rose to 47.0 last month from 45.4 in May -- the highest since May 2008 and beating analysts' forecasts for a more modest improvement to 46.5.

That was the fourth consecutive monthly rise, although the index has remained below the 50 level which separates expansion from contraction for a record 15 months.

The survey showed manufacturing output actually grew for the first time since last March, with an index reading of 52.1 in June, up from 48.1 in May and the fastest pace of growth since February 2008.

The data will reinforce expectations that Britain's economy is on the mend at last, although policymakers have warned that the road to recovery could be long and arduous.

Official data this week showed the recession started in the second quarter of last year -- three months earlier than previously thought, and the contraction in the first three months of this year was its deepest in more than 50 years.

Wednesday's figures are therefore unlikely to alter the view that the Bank of England will keep monetary policy loose for some time to come and at least until there is evidence any recovery is on a stable footing. "The most pleasing aspect of the ongoing recovery in June was its broad base," said Rob Dobson, senior economist at survey compiler Markit, noting that consumer, intermediate and investment goods producers had all posted gains in output.

The new orders index rose to show its slowest rate of decline since March 2008 and the export orders index also improved.

The employment index also rose to show the slowest pace of job-shedding since last August.

REUTERS POLL: 46.5 (range 45.0-48.0, 25 forecasts) (Editing by Andy Bruce)

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