According to the latest Markit/CIPS UK Manufacturing Purchasing Managers Index (PMI) for June, the UK has reported strong growth in output, new orders and jobs.

The Index reached 57.5 in June, up from 57.0 in May, and the second-highest reading in 40 months.

Manufacturing output increased for the sixteenth consecutive month in June. Although the rate of growth eased to a three-month low, it remained elevated and sufficient to ensure the average pace over the second quarter as a whole was the strongest for 20 years.

The level of incoming new business rose at the fastest pace since November 2013 and to one of the greatest extents since the survey began in 1992. The domestic market remained the prime source of new contract wins, although inflows of new export business also strengthened.

UK manufacturers reported growth in new work received from clients in Europe, Asia and the Middle East.

Manufacturing employment rose for the fourteenth successive month in June, as improved inflows of new business and increased production encouraged firms to expand capacity. The steepest rate of job creation was registered by SMEs, although large-scale producers also reported a solid increase to payroll numbers.

Price pressures rose during June, as average input costs increased for the first time since January and selling price inflation picked up. The increase in purchase prices was centred on the intermediate goods sector. Some firms linked this to shortages of certain raw materials, a factor further highlighted by a sharp lengthening in supplier lead times. In contrast, input costs fell at manufacturers of consumer and investment goods.

Group chief executive officer at the Chartered Institute of Purchasing & Supply (CIPS), David Noble, said: “The Manufacturing PMI hit a seven-month peak in June, rounding off its best quarter in over three years. The strong domestic market supported production and was the prime source of new business and sales, although new export orders also edged higher this month. Indeed, the brightening economic conditions and new product offerings meant that there was a healthy appetite to push into new markets.

He continued: “Over the second quarter, firms have enjoyed their best spell of output growth for 20 years and in response have been able to boost employment even further this month. A rise in the number of jobs was seen across all sectors as well as across both SMEs and large companies, adding to signs that the economic recovery is broadening.

Commenting on the report, KPMG’s UK head of industrial manufacturing, Stephen Cooper, said: “We are on the up both in our general economy and also in the manufacturing field. The growth in new orders has fed through to an increase in manufacturing employment. Job growth is always a highly encouraging trend and an increase in employment generally increases the spend power of consumers which normally further feeds the upward wider economic growth.”