Manufacturing PMI rose to a 12-month high of 45.4 in May, up from 43.1 in April. It has been rising sharply since hitting a low of 35.1 in February, where anything below 50 marks a contraction in activity and anything above indicates a rise.
"UK manufacturing looks like it may be close to turning the corner as the May PMI posted its strongest reading in 12 months," said Roy Ayliffe, a director at the Chartered Institute of Purchasing & Supply which co-produces the survey.
"At this rate we would hit the no-change 50 PMI benchmark by Autumn – significantly earlier than economists initially predicted," he said.
Production and new orders fell at the slowest rates for 12 and 14 months respectively, with larger companies faring better than small and medium-sized businesses.
Particularly encouraging was the new orders balance, which rose to 48.9 from 46.1 in April.
"In our view, the PMI surveys have been some of the most reliable indicators of the cycle in the past two years, so this sharp rebound should not be discounted," said Credit Suisse analysts in a note.
"On their current trajectory the PMI should be consistent with rising manufacturing production in a matter of months. Moreover, the recovery these indicators are showing is remarkably 'V'-shaped."
However, new export orders fell at a faster pace in May, measuring 45.3 on the PMI compared with 49.5 in April. It is further evidence that a weaker pound has so far failed to boost exports significantly, as demand in Britain's key export markets remains subdued because of the global recession.
By Angela Monaghan
Source: http://www.telegraph.co.uk
www.ukba.co.uk
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