Growth at British factory firms picked up in May as gains in production rose, but the rebound offers little to cheer about, IHS Markit and the Chartered Institute of Procurement and Supply said.
The seasonally adjusted Manufacturing Purchasing Managers' Index rose to 54.4 in May from a 17-month low of 53.9 in April. Despite registering a rebound, May's manufacturing data is "far from convincing," said Rob Dobson, director at IHS Markit, with unsold stock rising at its fastest extent in the survey's 26-year history.
Incoming new business grew in May, but the pace of expansion eased to an 11-month low. Employment growth also lost momentum, with the pace of job creation at its lowest in 15 months.
"A slowdown in new order inflows meant the expansion in production was achieved only by firms working through their backlogs of work ... [M]anufacturers have yet to fully adjust their production to the weakening trend in new business growth and there will need to be a rapid improvement in demand if output volumes are to be sustained in the coming months," Dobson added.
The rate of increase in average input prices accelerated for the first time since January amid rising raw material prices.
British firms continued to have a positive outlook, with 52% of respondents anticipating an increase in production over the coming year.
