UK manufacturing growth sinks to five-month low

31 August 2006
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01 September 2006 | Paul Snell

The rate of expansion in the UK manufacturing sector has fallen to its lowest level since March, according to the latest CIPS/RBS purchasing managers' index (PMI) released today.

The PMI, where a figure above 50 indicates growth, recorded manufacturing production at 53.1 in August. Although it was the 13th successive month of growth, the rate was down on July's reading of 53.6.

August's growth was attributed to increased levels of new orders and companies' efforts to reduce outstanding business.

There was also expansion in new work last month, but strong competition in foreign markets meant that the new orders index was also weaker, at 52.4 compared with July's figure of 55.

Supplier performance also recorded its lowest level since June 2004, as supplier delivery times fell to 40.1 in August from 42.9 in July.

It is the 54th successive month that lead times have lengthened, and this was attributed to the short supply of a number of commodities, such as metals and timber, and suppliers' lack of spare capacity.

The RBS/NTC Eurozone manufacturing PMI also recorded a weakening in the rate of expansion. The PMI read 56.5 in August, down from 57.4 in July. This was the weakest rate of growth in five months.

The manufacturing economy in the US also registered growth last month, according to a report by the Institute of Supply Management. The industry recorded a figure of 54.5 in August, down 0.2 on July.

Coverage of previous PMI reports is available at www.supplymanagement.com/pmi



SMsep2006

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