[LONDON] British manufacturing growth hit a seven-month high in February, according to a survey which adds to signs that Britain's economy started 2015 on a strong footing, albeit one based mostly on domestic demand.
The latest Markit/CIPS UK Manufacturing Purchasing Managers'Index (PMI) rose a full point to 54.1 in February from an upwardly revised January reading. That was higher than all forecasts in a Reuters poll and comfortably above the 50 mark denoting growth.
The survey will cheer finance minister George Osborne, who hopes strong economic growth over the last 18 months will persuade voters to hand his Conservative Party victory in a national election on May 7.
The PMI suggested British manufacturing output is growing at a quarterly rate of around 0.5 per cent, compared with a 0.2 per cent expansion in the final three months of 2014. "This reinforces the picture of a broader growth revival in the UK so far in the opening quarter," said Rob Dobson, senior economist at survey compiler Markit.
But he warned that the upturn relied on the manufacture of consumer goods, rather than the plant and machinery which would reflect improving business investment.
Official data last week showed business investment fell at the sharpest rate in nearly six years in the final three months of 2014, as tumbling global oil prices hit the North Sea petroleum industry.
News of a renewed fall in export orders further underlined Britain's reliance on domestic demand to drive the recovery. Markit said many respondents linked this to a rise in sterling, which has strengthened by almost 7 per cent against the euro since the start of the year.
Factory gate prices fell at the fastest pace since September 2009, while prices paid by manufacturers for raw materials and energy continued to fall sharply, albeit at a slightly slower pace than in January. "Waning inflation therefore looks set to continue to provide leeway for the Bank of England to push back that first rate increase until next year," said Mr Dobson.