UK manufacturing shows first boost for three months

3 October 2011

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3 October 2011 | Angeline Albert

The UK manufacturing sector’s return to growth in September – the first improvement in three months – is moderate, but a welcome relief.

The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) rose to 51.1, up from 49.4 in August, thanks to an increase in output. A figure above the neutral 50 mark indicates growth.      

According to research firm Markit, a large part of the increase in output was achieved through the fastest depletion of backlogs of work for two years. After declines in the two previous months, new orders rose slightly in September.
Levels of new exports contracted at the quickest pace since May 2009, with reports of lower demand from the US, Europe, Asia and the Middle East.

Manufacturing employment fell for the third successive month, with job losses linked to companies restructuring, non-replacement of leavers and the subdued level of new orders.
Price pressures continued to ease in September, with the increase to input and output prices at its weakest rate since the start of 2010. Companies reported higher purchasing costs for commodities, electrical items, energy and packaging, but lower prices for certain plastics and steels.

The average PMI reading in Q3 2011 (50.0) was far lower than Q1 (59.4) and Q2 (52.7) readings.

CIPS CEO David Noble, said: “The UK manufacturing figures will offer some cause for relief after the 26-month low we saw in August. However, we are still a long way off from celebrating. Many manufacturers are living off the backlog of orders they have yet to complete, as well as promotional activity and new product launches. The overall picture is rather downbeat as growth for the third quarter is well below the average and employment continues to fall adding to a subdued mood.”

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