Developing

Factories In Britain 'Booming Again'

Factories in the UK are "booming again" after the strongest monthly output for nearly two decades in August, it is claimed.

The Markit/CIPS purchasing managers' index (PMI) findings add to hopes that the manufacturing sector recovery, while still lagging behind its pre-recession peak, is gaining further momentum.

It found that activity rose to a reading of 57.2, its best level since February 2011. A figure above 50 represents growth.

Output rose at the fastest pace since July 1994 while new orders increased at their strongest pace since August 1994.

Rob Dobson, senior economist at survey compilers Markit, said: "The UK's factories are booming again".

He said rising demand from domestic customers was being accompanied by a return to growth of the eurozone, Britain's largest trading partner.

Jobs increased for the fourth month running though this was described as muted as companies tried to squeeze more from existing resources.

Manufacturers also faced having to absorb the soaring costs of oil and raw materials, Markit said.

The improvement in the sector adds weight to evidence that the speed of economic recovery is increasing, with GDP for the second quarter of the year measured at 0.7%.

But the acceleration has added to speculation that the base rate of interest may have to be raised from its historic low of 0.5% sooner than 2016 - the figure suggested by the Bank of England's forward guidance policy.

The manufacturers' organisation the EEF, whose own survey on Monday had pointed to a "surge" in activity for the sector, voiced confidence that the growth was sustainable.

Its chief economist Lee Hopley said: "We're seeing a consistent and positive trend across UK manufacturing and today's data reinforces the view that the sector is back on the road to recovery."