Manufacturing jump boosts markets in UK US and eurozone

Manufacturing – A record jump in manufacturing activity in the UK, the US and the eurozone lifted stock markets on both sides of the Atlantic on Tuesday.

Pent-up demand after a year of stop-start activity due to the coronavirus outbreak pushed factory order books to fresh highs in May, adding to previous growth records set in April, according to a bellwether survey of factory owners.

Oil prices surged, with Brent crude surpassing $70 a barrel for the first time since March, while US crude hit its highest price in two years. The broad-based recovery increased demand for precious metals such as silver, used in environmentally friendly electric cars and solar panels.

With more than half of all US adults fully vaccinated and much of the economy open for business, American manufacturers were able to ramp up production to unprecedented levels and reinforce predictions from some analysts that GDP growth could hit double figures by the end of the year.

US president Joe Biden’s $1.9tn stimulus package and the prospect of a multi-trillion infrastructure boost later this year have also fueled demand from consumers and businesses to push the ISM measure of production activity to 61.2 last month from 60.7 in April, well above the 50 mark that separates expansion from contraction.

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The UK saw even sharper growth in May across its manufacturing sector as factories enjoyed swelling orders books from domestic and foreign buyers. The IHS Markit purchasing managers index (PMI) increased to 65.6, up from 60.9 in April.

In continental Europe, Spain and France lagged behind Italy and Germany in the race to secure manufacturing orders, according to the PMIs, after German factories maintained a strong run of increasing output.

Mining companies and housebuilding firms – which made gains following an 11% increase in annual house prices – pushed the FTSE 100 index of listed shares back towards last month’s high of 7,129, after closing at 7,083, up almost 1% on the day.

Source – https://www.theguardian.com/