Manufacturing optimism increased to 53.7 index points in June from 51.9 in May, surprising economists who had expected it to fall to 50.46, a Barclays-sponsored poll of purchasing managers, released on Friday, showed.
June marked the fourth month the purchasing managers index (PMI) remained above 50 points.
The new sales orders component of PMI rose to 54.1 points from the previous month’s 51.8, employment component to 50.1 from 48, purchasing commitments to 50 from 46.9, purchasing prices to 81.4 from 80.1, business activity to 54.3 from 52.9 and inventories jumped to 57 from 51.5.
Components that declined included expected business conditions, which fell to 52.9 from 54.1, suppliers’ performance to 54.3 from 56.2 and backlog of supplier orders, which fell to 38.5 from 48.2.
"This is an encouraging sign that conditions in the factory sector may be improving after a lacklustre 2015 and slow start to 2016," the report said.
"Stronger demand, according to some respondents driven by improved exports, helped lift production higher. However, it remains to be seen whether this will be sustained. Domestic demand remains weak and exports could come under renewed pressure due to weaker UK and eurozone growth in a post-Brexit world."
This article first appeared in Bday