Firms take on more staff as new orders rise sharply

30 September 2003
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01 October 2003 | Gareth Mytton

UK manufacturers responded to growing order books in September by taking on more staff for the first time in four years, according to the latest PMI report.

The headline purchasing managers' index (PMI) - a composite indicator of economic activity published by CIPS and NTC Research - rose to 52.9, from 52.2 in August, but still above the 50 figure that indicates no change on the previous month.

Employment rose, albeit marginally at 50.7, for the first time in four years to meet sharp growth in new business.

The overall new orders index rose to 56.3 and the export index rose to 54.9. Rising demand in the US, along with a recent rally in the euro that made UK goods more competitive, was behind the biggest climb in exports since last May.

Stocks of finished goods fell under a combination of destocking policies and an inability to keep up with new orders.

Output prices were cut, at 48.4, in a conscious effort to stimulate demand. Input prices fell overall, at 49.7, but the price of some metal and plastics products rose.

Suppliers' delivery times lengthened as companies stepped up their purchasing activity, although stocks of purchases declined.

Trading conditions also improved in the euro-zone. NTC Research put the euro-zone PMI at 50.1, the first expansion in seven months. The main engine of growth was growing production in Germany and Italy. In addition, the new orders index climbed to 52 for the second consecutive month of growth.

Activity also increased in the US, according to the Institute for Supply Management's manufacturing report on business. The September PMI was 53.7, a slight fall on August, although new orders, new exports and production continued to rise.


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