Signs of recovery for UK industry

The pharmaceutical industry is one of the more successful parts of the sector

UK manufacturing activity shrank at its slowest pace for a year in June, a survey has indicated, adding to hopes that the worst of the downturn is over.

The Purchasing Managers' Index from the Chartered Institute of Purchasing and Supply (CIPS) said the pace of decline in new orders continued to ease.

And for the first time in 15 months, the output index was positive, indicating increased production.

CIPS said there were signs the sector may be coming out of recession.

The news suggests that after the sharp fall in GDP in the first three months of the year, the figures are likely to be better for the rest of the year.

"The latest PMI data suggests that after months of gloom and doom, there are some signs of relief for the UK manufacturing sector," said David Noble, chief executive of the Chartered Institute of Purchasing and Supply.

"Most encouragingly, purchasing managers said that output, which is a key component of the PMI index, has risen for the first time in 15 months indicating that the sector may finally be coming out of recession."

'Further sign'

The headline manufacturing PMI measure rose to to 47.0 from 45.4 in May. That was the fourth consecutive month of improvement in the index, though any figure below 50 still represents contraction.

"The manufacturing sector is currently benefiting markedly from the substantial stock adjustment that has taken place, and there are signs in the June survey that the more competitive pound is helping exporters," said Howard Archer, chief economist at IHT Global Insight.

"Nevertheless, manufacturers still face serious obstacles and the survey fans suspicion that sustainable growth in the sector could remain elusive for some time to come."