UK manufacturing activity continues to grow

2 December 2005
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02 December 2005

An increase in overseas orders for UK-manufactured goods helped the latest CIPS/RBS purchasing managers' index (PMI) remain positive in November.

The overall PMI - a composite indicator of sector conditions in which an index above 50 means growth - was 51.0, above the neutral mark for the fourth month in a row.

However, it is a drop on October's figure of 51.7, which represented the fastest growth rate for 2005.

Demand from the US, EU and Middle East improved during the month. The new orders index recorded 52.2, as new products were launched and increased sales and marketing efforts helped boost the number of new contracts.

Production expanded for the sixth month running, as companies increased output in response to new orders.

High energy, plastics, chemicals and metals prices led to further increases in average purchasing costs of UK manufacturers. The input prices index registered 58.0.

Roy Ayliffe, director of professional practice at CIPS, said: "The slight improvement reported was mainly down to gains in new business from abroad as exchange rates between sterling and major world currencies became more favourable.

"Production expanded to an 11-month high as a result of improved new orders and attempts to reduce work outstanding."

The report added that stock holdings continued to fall as a result of the contraction of inventory and improved stock-management systems.

The RBS/NTC Eurozone Manufacturing PMI rose to a 14-month high going from 52.7 in October to 52.8 last month.

The Institute of Supply Management (ISM) in the US posted an index of 58.1 for November, showing growth for the 30th consecutive month. It is a slight drop on October's figure of 59.1. ISM said while energy costs and interruptions to supply remain a concern, purchasers are generally satisfied with current business conditions.


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