The PMI rose to a three-month high of 58.1 in November, up from 57.8 in October. All five of the PMI components had a positive influence, as production, new orders, employment and stocks of purchases rose and supplier lead times lengthened.
Output increased for the 18th month running in November, with the rate of expansion accelerating slightly from October's eight-month low. Companies reported that improved new work intakes – especially from the domestic market – and efforts to build safety stocks supported increased output.
There remained widespread mention of input and labour shortages stymieing efforts to raise production, however. This led to existing stocks being depleted to satisfy customer orders. The strain on supply chains also led to further substantial lengthening of average vendor lead times. Resulting shortages of components and commodities, combined with input demand outstripping supply, led to a survey record increase in average purchase prices.
Around three-quarters of manufacturers reported a rise, compared to less than 1% seeing a fall. Cost and market pressures also affected selling prices, which rose at a rate close to October's series-record. November saw inflows of new business increase for the tenth straight month, underpinned by stronger UK market conditions, returning customers and rising client confidence.
The trend in new export orders worsened, however, with intakes dropping for the third month in a row. There were reports of weaker demand from China, disruption to trade with the EU (in part due to ongoing Brexit complications) and the cancellation of some orders due to extended lead times.
Capacity also remained stretched at UK manufacturers during November, with backlogs of work rising to a near record extent. This supported further job creation in the sector, with employment rising for the eleventh month running and at the quickest pace since August.
Purchasing activity rose for the tenth month running in November. Increased input buying reflected rising production needs, safety stock building and efforts (including over-purchasing) to minimise supply chain delays.
Input stock holdings expanded solidly as a result. UK manufacturers maintained a positive outlook during November, with business optimism rising to a three-month high. Over 63% of companies expected output to rise over the coming 12 months, with only 6% forecasting a decline.
Positive sentiment was linked to Covid-19 recovery, economic growth, new product launches, planned marketing campaigns, business expansions, diversification, innovation and reduced supply chain stress.
