LONDON (ShareCast) - Output from UK manufacturers has grown for the first time since March 2008 and activity is declining at its slowest pace in 13 months.
The CIPS/Markit manufacturing purchasing managers' index rose to 47 in June from
45.4 the month before and a gloomy 34.9 in February.
It's the fourth month in a row the survey has improved and brings the 50 level, which indicates unchanged activity, within sight.
Manufacturing output grew at its fastest pace since February 2008 as the output index jumped to 52.1 in June from 48.1 a month earlier.
"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," says Howard Archer, chief UK economist at IHS Global Insight.
Today's numbers provide further evidence that the worst of the recession is over and conditions are set to improve.
But Archer cautions that manufacturers are "still battling against muted domestic demand, difficult conditions in overseas markets and intensified competition".
Investors will also remember yesterday's GDP report that showed the UK shrank by 2.4% in the first quarter of 2009 from the previous three months, a downward revision from the previous estimate of a 1.9% fall.
It's the fastest contraction in the UK economy since 1958 and means GDP is now 4.9% lower than in the first quarter of 2008.
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