LONDON (Reuters) – Britain’s manufacturing sector moved into positive territory in May after a long decline, a survey showed on Monday, but rising prices charged by businesses could prompt the Bank of England (BoE) to take more action cautious about a possible reduction in its key rates.
According to the final PMI indicator for the manufacturing sector published by S&P Global/CIPS, the index reached 51.2 in May, its highest level since July 2022, compared to 49.1 in April and 51.3 in the first estimate.
This is only the second time in 22 months that this index is above the threshold of 50 separating growth and contraction in activity.
Production levels and new orders have grown at the fastest pace since the start of 2022 and the recovery has been broad-based.
“Even though this recovery comes from a strengthening domestic market, there are signs that demand from abroad is also approaching the stabilization threshold,” notes Rob Dobson, director of S&P Global Market Intelligence.
The percentage of manufacturers forecasting higher output a year from now rose to 63%, with their sentiment reaching the highest level since July 2022. Some manufacturers, however, are expressing concerns about political uncertainties in Britain and abroad. General elections are scheduled in Britain on July 4.
Factory prices rose at the fastest pace in a year, an indicator closely watched by the BoE.
(Written by Andy Bruce; Claude Chendjou, edited by Blandine Hénault)
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