UK manufacturing PMI rise indicates continued growth

UK manufacturing Purchasing Managers' Index (PMI) figures were strong, pointing to further robust growth figures this year, local media reported on Thursday. The headline manufacturing PMI edged up to 57.3 in April from March's 55.8, above the consensus expectations of 55.3. The manufacturing index has expanded since early 2013, and the April figure is particularly good when compared with the long-term average of 51.4. Improvements were broadly based; the biggest monthly increase was in the output sub-index, which improved by 3.2 points to 61.9, its highest level since August last year. There was good news also in the new orders index, which grew 2.4 points to 59.8. The most encouraging news for the UK economy, which needs to rebalance its growth from being consumer-led to a more export-led recovery, are the export orders figures which were up 1.6 at 54.9. This shows that a strong momentum has built in exports, which is likely to continue for the current quarter at least. The central bank, the Bank of England (BOE), will take heart from the continued lowering trend in output price inflation, which was below 50 for the second consecutive month, and likely to contribute to lowering inflationary pressures in the coming months. Economists now expect UK economic growth to moderate through the course of 2014, although GDP growth figures for the first quarter released earlier this week showed the recovery continuing for the fifth consecutive quarter, this time at 0.8 percent. George Buckley, chief UK economist at Deutsche Bank, said, "The rise in today's manufacturing index bucks a moderate easing trend in place since the end of last year, the PMI had fallen from 57.9 in November to 55.8 before today's April bounce back to 57.3." Buckley said there was a relationship between the manufacturing PMI and economic growth. Buckley said, "This now suggests that there could be a stronger rate of growth than the 0.8 percent quarter on quarter growth published earlier this week." He added, "It is encouraging that the PMI has remained strong into the second quarter; while this presents upside risks to our forecasts for economic growth, we retain our view of a moderation going forward, even if that is delayed relative to our current view."