UK manufacturing continues to grow

1 November 2006
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01 November 2006 | Rebecca Ellinor

Purchasing managers saw strong manufacturing sector growth in October, but at a more modest rate than September.

Published today, the latest CIPS/RBS purchasing managers' index (PMI), a composite indicator of sector conditions in which an index above 50 means growth, was 53.7 for October. While this was slightly weaker than September's figure of 54.5, it nevertheless represented a reading above the 'no movement' mark for the 15th month running.

Companies reported higher costs for metals, chemicals and plastics and the cost of timber and paper were also higher than in September. The seasonally adjusted input prices index posted a reading of 63.1.

The rising cost of raw materials resulted in companies having to increase their output costs, which rose to their highest level for three months. The index came in at 56.0.

There was little movement in the sector's employment levels as purchasing managers reported improvements in staff productivity and plant efficiency. The employment index recorded a reading of 50.0.

"This allowed companies to meet output demands without the need to raise staff levels," said Roy Ayliffe, CIPS director of professional practice.

New orders continued to come in, with solid gains in export orders from the US, Eurozone, China and Russia.

In the US, the Institute of Supply Management recorded a manufacturing PMI of 51.2 for October. So while economic activity in the country's manufacturing sector grew for the 41st consecutive month, it was at its lowest rate since June 2003.

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