An employee passes the rolled coil finishing mill inside Liberty House Group’s rolling steel mill in Newport, U.K. (Photographer: Chris Ratcliffe/Bloomberg)

U.K. Manufacturing Grows at Fastest Pace in More Than Four Years

(Bloomberg) -- U.K. factories recorded their strongest growth in more than four years in November, with firms recording strong domestic and export demand.

The picture in IHS Markit’s latest manufacturing Purchasing Managers Index follows a similarly upbeat report from the Confederation of British Industry, whose monthly factory-orders index is at the highest since 1988.

U.K. Manufacturing Grows at Fastest Pace in More Than Four Years

In a further positive sign, orders for U.K. investment goods rose at the fastest pace in more than two decades. According to Rob Dobson at Markit, it suggests that capital spending is “showing signs of renewed vigour.”

The headline index number rose to 58.2 from 56.6 in October, the highest since August 2013 and well above the median forecast. While manufacturing accounts for less than 10 percent of the economy, the figures are still good news amid a broad slowdown in growth. Expansion this year is forecast to be the weakest since 2012.

The report also highlighted some supply constraints. The Bank of England has warned that the economy’s potential pace has fallen, and so inflationary pressures could build more easily.

Markit said backlogs of work at factories increased for the first time in six months, and tighter capacity saw companies add staff at the fastest pace since 2014. But with the labor market so tight, they may not be able to continue finding workers so easily.

“Manufacturers have seen supply-chain constraints and rising demand for raw materials overtake exchange rate effects as the primary motivator of price increases,” Dobson said.

©2017 Bloomberg L.P.