Manufacturing growth accelerates across developed economies

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Last week we had a bonanza of positive manufacturing data for the UK - with growth in the first quarter up 1.3% and April's PMI signalled a strong start to Q2.

The UK is part of more widespread upswing of manufacturing activity across developed economies. Weather disruptions aside the US has seen a solid performance from it manufacturers on the back of rising consumer confidence and a pick up in building activity which has support growth for household goods, cars and construction equipment.

In Europe, 2014q1 brought the first set of positive PMIs across all the major economies since the beginning for 2011, and this broadening improvement across manufacturing in the region comes on the back of solid export demand. For a change, this sits on contrast to some emerging market indicators, where PMIs have been drifting south since the middle of last year.

Encouraging news on the labour market front is the corresponding pick up in recruitment activity that is following the upturn in output and new order intake across Europe.

What a difference a year makesindex of activity 50 = no changeSource: Markit

OECD predicts world trade pick up

In addition to the more upbeat assessment of developed economy prospects published today by the OECD, it is also pencilling in a strengthening of world trade over the course of this year and into 2015.

" There are some early signs that trade intensity may now be rising... This was helped by stronger demand in the major OECD economies, particularly for fixed investment and inventories. growth could pick up to just over 5.75% at an annualised rate by the latter half of 2014."

World trade growth, % year on year changeSource OECD

Forecasts for EU manufacturing

Forecasts are pointing to manufacturing expansion across all the major European economies and the US this year - a turnaround from the very patchy 2013 picture.

At present the UK and the US look to be leading the pack.

Manufacturing output growth, % change on a year agoSource: Oxford Economics and EEF


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