01 December 2003 | Gareth Mytton
Growing demand for consumer goods on the run-up to Christmas pushed manufacturing activity in November to its highest level since December 1999, according to the latest PMI figures.
The headline purchasing managers' index (PMI) - a composite indicator of economic activity published by CIPS and NTC Research - rose to a seasonally adjusted 54.5, from 54.3 in October. The index has remained above the 50 figure that indicates no change on the previous month since June.
The output index, at 58, matched the recent rapid expansion in business. Growth in new orders and exports accelerated, as domestic and foreign demand picked up. Investment goods fared particularly well. Trade with the US overcame the unfavourable exchange rate, and reports suggested that demand also picked up in Asia and Europe.
Backlogs continued to shrink, indicating that capacity had not posed problems. Productivity gains also helped companies to cut jobs.
Only 8 per cent of business were able to raise input prices (50.8). The higher charges were blamed on rising input costs (55.2). Firms pointed to increases in commodity prices - for oil and metals, in particular steel and copper - along with energy bills.
Suppliers faced capacity shortages and their delivery times worsened in line with increased purchasing activity (56.3). But stocks of purchases fell owing to increased production and longer deliveries.
In the euro-zone, the manufacturing PMI rose to 52.2 in November, according to NTC Research. Across all of the countries surveyed, employment fell as companies remain uncertain on how long the upturn will last.
Output (54.4) accelerated everywhere except Germany, where it slowed, and Greece, where it fell. Greece was also the only country that saw new orders fall.
In the US, the recovery appeared to gain momentum, according to the Institute for Supply Management (ISM). Its headline PMI rose to 62.8 in November, as all indices - apart from customers' inventories - grew. This figure would equal a 7.3 per cent increase in gross domestic product if it lasted for a year, the ISM said in its manufacturing report on business.
* More information on the UK and euro-zone PMIs is available at www.ntc-research.com
. The full text of the ISM reports on the US economy for November, and previous reports, is available at http://www.ism.ws/ISMReport/index.cfm.