UK manufacturers kept up their rapid pull out of recession in May as overseas demand boosted orders according to the latest industry figures.
The Chartered Institute of Purchasing and Supply’s (CIPS) latest activity index - where a reading over 50 indicates growth - hit 58 for the second month in a row, the strongest since September 1994.
The industry has now grown for eight successive months, with export orders at near-record levels as the weak pound helped firms win business in China, Europe, the US and the Middle East.
CIPS said the sector’s recovery had “taken everyone by surprise” but warned that manufacturers were still vulnerable amid recent turmoil in Europe due to fears over debt defaults and austerity measures impacting growth.
Chief executive David Noble said: “Given the euro countries are Britain’s biggest trading partners, any double-dip recession there would undoubtedly damage the UK manufacturing sector.”
Graeme Allinson, head of manufacturing, transport and logistics at Barclays Corporate, said: “UK manufacturing retains an upbeat outlook, with all statistical indicators pointing to another quarter of substantial growth. British producers have certainly been quick to take advantage of any glimmer of increased confidence, adjusting their business operations to mirror levels of demand and looking to target international markets.
“It is essential for manufacturers to ensure they are not over-dependent on the government purse over the coming years however, as public spending around the world is increasingly squeezed by deficit reduction. In the UK there has been clear indication that spending cuts will be widespread and with 55 per cent of UK manufacturing supplying the home market, diversification, both in terms of import vs export and also the private vs public sector client mix, should be the order of the day.”