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UK manufacturing PMI rises

Improvement in domestic market and overseas demand.

The seasonally adjusted UK Purchasing Managers Index (PMI), which measures manufacturing activities in the country, rose to a two-year high of 52.5 in June compared to 51.5 in May, primarily due to rise in new business, according to data collected from 600 industrial firms between 12 and 25 June 2013 by research firm Markit and the Chartered Institute of Purchasing & Supply (CIPS).

A PMI of above 50 implies that the sector is experiencing growth, and below hints at contraction.

During the month, domestic market conditions and demand from overseas improved further.

Demand from domestic markets and clients based in Europe, China, North America, Scandinavia and the Middle East grew during the month. Incoming new orders rose for the fourth consecutive month in June, while manufacturing employment remained unchanged.

Price pressures remained subdued during the survey period. Input costs declined for the third straight month in June due to fall in costs for chemicals, feedstock, metals, packaging and plastics.

During the month, average factory gate prices declined primarily due to strong competition, while finished goods stocks declined as companies used their existing inventory to satisfy the dual requirements of new and existing contracts.

Rob Dobson, senior economist at Markit, said: "The UK manufacturing sector made positive strides on the recovery path during the second quarter of the year. June saw output and new order growth hit rates not seen since early-2011, as a brightening domestic market and resilient overseas demand led to a broad-based expansion across the sector.

"The near-term outlook for output also remains on the upside, as above-trend sales growth depleted inventories that manufacturers will need to rebuild later in the year. Job creation is still weaker than hoped for, but this should improve if solid demand growth is sustained and eats into spare capacity.

"The survey suggests that manufacturing output rose by around 0.5 per cent over the second quarter. Taken with recent signs of service sector strength and a stabilising construction industry it paints a picture of UK economic growth picking up from the opening quarter’s 0.3 per cent to at least 0.5 per cent. It therefore seems increasingly unlikely that the Bank of England’s policymakers will opt for further asset purchases at its meeting later this week."

David Noble, CEO of CIPS, said: "Momentum is building in manufacturing as the sector begins to work up a head of steam. The industry experienced another good month to round off a solid Q2. The two-year high in new business growth will do much to reassure firms we are on track for a recovery. Both domestic and export orders played their part, with consumer goods showing particular signs of traction.

"Employment is the one disappointing spot, showing little change from last month; a reminder of the anxiety that still exists in the sector. The swell in order books and increased levels of purchasing activity however, signal that the subdued labour market trend may be shortlived.

"Firms will also take heart from the drop in input costs, which has enabled them to reduce their own prices for the first time in over three years. This has eased the pressure on margins and enabled manufacturers to stay competitive. Long may it continue.2

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No, David Cameron’s speech was not “left wing”

Come on, guys.

There is a strange journalistic phenomenon that occurs when a party leader makes a speech. It is a blend of groupthink, relief, utter certainty, and online backslapping. It happened particularly quickly after David Cameron’s speech to Tory party conference today. A few pundits decided that – because he mentioned, like, diversity and social mobility – this was a centre-left speech. A leftwing speech, even. Or at least a clear grab for the liberal centre ground. And so that’s what everyone now believes. The analysis is decided. The commentary is written. Thank God for that.

Really? It’s quite easy, even as one of those nasty, wicked Tories, to mention that you actually don’t much like racism, and point out that you’d quite like poor children to get jobs, without moving onto Labour's "territory". Which normal person is in favour of discriminating against someone on the basis of race, or blocking opportunity on the basis of class? Of course he’s against that. He’s a politician operating in a liberal democracy. And this isn’t Ukip conference.

Looking at the whole package, it was actually quite a rightwing speech. It was a paean to defence – championing drones, protecting Britain from the evils of the world, and getting all excited about “launching the biggest aircraft carriers in our history”.

It was a festival of flagwaving guff about the British “character”, a celebration of shoehorning our history chronologically onto the curriculum, looking towards a “Greater Britain”, asking for more “national pride”. There was even a Bake Off pun.

He also deployed the illiberal device of inculcating a divide-and-rule fear of the “shadow of extremism – hanging over every single one of us”, informing us that children in UK madrassas are having their “heads filled with poison and their hearts filled with hate”, and saying Britain shouldn’t be “overwhelmed” with refugees, before quickly changing the subject to ousting Assad. How unashamedly centrist, of you, Mr Prime Minister.

Benefit cuts and a reduction of tax credits will mean the Prime Minister’s enthusiasm for “equality of opportunity, as opposed to equality of outcome” will be just that – with the outcome pretty bleak for those who end up losing any opportunity that comes with state support. And his excitement about diversity in his cabinet rings a little hollow the day following a tubthumping anti-immigration speech from his Home Secretary.

If this year's Tory conference wins the party votes, it’ll be because of its conservative commitment – not lefty love bombing.

Anoosh Chakelian is deputy web editor at the New Statesman.