UK Manufacturing climbs to highest level in over four years

A UK manufacturing survey has indicated that activity grew at its fastest pace in more than four years last month.

The Purchasing Managers’ Index compiled by IHS/Markit hit 58.2 in November, the best level in 51 months, with exports playing a “big part” in the expansion.

Separate data also showed that foreign investment into the UK hit a record last year, boosted by several very large takeover deals.

The Office for National Statistics recorded inward investment of £145.6bn in 2016, up from £25.3bn in 2015.

The UK voted to leave the European Union in June 2016, but economists say that vote probably did not have much effect on these figures.

Paul Hollingsworth, UK Economist at Capital Economics, pointed out that the big deals were likely to have been planned well in advance of the vote.

He also said it was impossible to say if inflows of investment would have been even greater without the Brexit vote.

“I think 2017 could be the more challenging year for Foreign Direct Investment, though, as Brexit draws closer,” Mr Hollingsworth said.

The compilers of the survey said the results indicated UK manufacturing had “shifted up a gear” last month.

At 58.2, the PMI index suggests strong growth as any reading above 50 indicates expansion.

“The domestic market remained strong but new export orders primarily from the US and Europe were a big part of this overall picture of success,” said Duncan Brock, who contributed to the report.

But some economists question whether UK factories can maintain their current pace.

“The outlook for manufacturing appears mixed. Domestic conditions look challenging despite November’s healthy orders,” said Howard Archer, chief economic advisor to the EY Item Club.