British manufacturers took another step on the road to recovery last month after figures today showed the fastest rate of expansion since October 1994.
The Chartered Institute of Purchasing & Supply (CIPS) said exports were helping to drive growth as the sector continued its healthy start to 2010.
Its monthly headline activity index, where a score over 50 registers growth, showed a reading of 57.2 – up from 56.5 in February and a fresh 16-year high.
The figure, which is calculated from data on new orders, production, employment and supplier performance, is also 20 points better than the low of 35.4 at the end of 2008 when output slumped in the wake of the credit crunch.
Jorg Radeke, an economist at the Centre for Economics and Business Research, said: “The latest data underlines that the manufacturing sector recovery is gathering speed and that the industry has the potential to be an engine of growth for UK plc.”
CIPS said production rose for the tenth consecutive month in March, with the rate of increase at its highest level since July 1994 and the second-fastest in the 18-year history of the survey.
New orders rose for the ninth month in a row, helped by another lift in export business as the weak sterling exchange rate boosted competitiveness.
CIPS chief executive David Noble said: “To see such a fast paced recovery in the manufacturing sector is hugely encouraging. Exports are clearly a main driver of growth but we are also seeing recovery across the whole sector.”
However, he pointed out that there was still a long way to go before manufacturing returned to pre-recession levels.
Staffing levels declined slightly but CIPS said firms had sufficient capacity to cope with the requirements of work on new and existing contracts.
Companies also faced increased inflationary pressures during the month after purchasing costs rose at the fastest pace since September 2008.