01 November 2004 | Gareth Mytton
Rises in new orders at home and abroad helped the UK manufacturing sector to enjoy stronger growth in October amid soaring input price inflation, according to the latest purchasing managers' index (PMI).
The PMI - a composite indicator of economic activity from CIPS and NTC Research, in which 50 means no change on the previous month - rose to 53, from a revised PMI of 52.3 in September.
Companies are trying to fulfil new business in domestic markets and for export, at 53.4 and 52.7 respectively, from spare capacity. However, they also took on more staff to meet demand.
Purchasers also suffered from high oil prices, which drove the input prices index to a nine-and-a-half-year high of 73.5. The price of oil-related products had rocketed, according to survey respondents, and oil prices had also pushed up energy bills.
Bottlenecks in the supply chain also fuelled the increase. Suppliers' delivery times lengthened again, at 43.9, owing to strong demand from China and shortages of steel.
The rise in quantities of purchases (53.1) largely reflected the growth in new business, although purchasers were also attempting to mitigate short-term price rises and supply shortages. Stocks of purchases declined slightly, at 49.8, as businesses sought to cut costs and struggled to pass on higher prices to customers.
In the euro-zone, October's manufacturing PMI fell for the third month in a row, to reach 52.4, from 53.1 in September. Growth in output slowed in all countries.
In the US, the Institute for Supply Management's (ISM) manufacturing report on business put the PMI at 56.8, down from 58.5 in September. As in the UK, energy prices and commodity price inflation were also major concerns for US businesses.
• Coverage of previous months' manufacturing, construction and services PMI reports is available at http://www.supplymanagement.com/pmi
• 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 manufacturing economy for October and previous months is available at http://www.ism.ws/ISMReport/index.cfm.