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03 November 2017

UK manufacturing makes ‘impressive start’ to final quarter of 2017

The UK manufacturing sector started the final quarter of the year on a solid footing, according to the latest Markit/CIPS Purchasing Managers’ Index (PMI).

The PMI sat at 56.3 in October – up from 56.0 in September and above the neutral mark of 50.0.

Markit says that production rose at an identically solid pace to that registered in the prior survey month during October, with the expansion broad-based by sub-sector as consumer, intermediate and investment goods producers all registering output growth.

Total new order intakes also rose at a substantial rate during October, recovering part of the growth momentum ceded in the prior survey month. The domestic market was the prime source of new contract wins, although new export business also continued to rise. Companies mentioned improved intakes of new work from clients in the USA, mainland Europe, South America and Australia.

Additional findings show that job creation was registered for the fifteenth successive month, with the pace of growth improving to a 40 month high.Staffing levels were also raised to cope with increased production requirements, company expansion plans and to meet expected future demand growth.

Meanwhile, capacity pressures were still present in supply chains during October, leading to a further marked lengthening of vendor lead times. Robust demand for raw materials combined with sellers’ markets developing for certain inputs led to higher purchase prices. Input costs also increased to the greatest extent in seven months, contributing to the steepest rise in selling prices since April.

Says IHS Markit director Rob Dobson: “UK manufacturing made an impressive start to the final quarter of 2017 as increased inflows of new work encouraged firms to ramp up production once again. The sector looks to be achieving a quarterly rate of expansion close to 1%, therefore sustaining the solid pace of growth signalled by the official ONS estimate for the third quarter. The domestic market remained strong, whereas new export orders increased at a slightly slower pace, the latter showing signs of being hit by the recent strengthening of sterling.”

Adam Offord

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