A new measure of the health of UK export markets shows trading conditions to be the best for six years, stimulating soaring UK export sales and strong profits growth, according to research conducted by NTC Economics Ltd on behalf of Euler Hermes UK, a part of Allianz.

The new index is derived from the monthly Purchasing Managers’ Index (PMI) surveys conducted by NTC Economics and other organisations around the world covering 6,000 companies in 22 countries.

By weighting together the national PMI data according to the UK’s trade with each country, a reliable monthly indication of the health of UK export markets can be calculated. The resulting Euler Hermes UK PMI Exporters’ Index for the UK registered 58.6 in May, and points to buoyant business conditions for UK exporters.

“The index moves in advance of changes in official data on actual export sales,” explains James Daly, commercial director of Euler Hermes UK, “thereby providing an advance indication of export performance. The strength of the Euler Hermes UK PMI Exporters” Index in recent months reflects surging economic growth in the Eurozone, which is the UK’s largest export market, and Japan, while at the same time economic growth remains robust in the United States.”

The Euler Hermes UK PMI Exporters “Index findings are supported by further Euler Hermes UK data, in the Euler Hermes UK Cash Flow and Profit report Q1, showing that overseas demand in the past two quarters has had the strongest positive influence on UK profits since 1995, with the exception of a brief period in 2004.

Overseas demand is also currently providing the strongest boost to profits of all the factors monitored.

“Looking at the sectors of the economy, it is the service sector that has reported overseas demand to have provided the largest stimulus to profits, with the Euler Hermes UK index for the service sector hitting an eight-year high,” Daly continues. “This points to surging growth of trade in services.

For traded goods, the Euler Hermes UK index for the manufacturing sector reached an eight-year high in Q4 of last year, but saw an easing in Q1 of this year. The Euler Hermes UK index for the distribution sector meanwhile hit a two-and-a-half year high in Q1.”

Euler Hermes UK works with all sizes of UK exporters, from SMEs through to the multinationals, conducting international trade anywhere in the world and has a team of 22 export experts responsible for covering more than €11bn of export exposure each year.