Manufacturing input costs fall as sector continues to grow

Will Green is news editor of Supply Management
1 December 2014

Manufacturing input costs fell for the third straight month in November as the sector continued its expansion, according to a survey of buyers.

New domestic orders were the main driver behind the Markit/CIPS UK Manufacturing Purchasing Managers’ Index posting a reading of 53.5 in November, up from the figure of 53.3 in October and a four-month high. A reading of 50 indicates no change.

Companies reported paying lower prices for chemicals, commodities, food raw materials, oil and plastics, while output charges rose only marginally and to the weakest extent in 17 months.

David Noble, group CEO, CIPS, said: “Procurement and supply chain professionals report lower costs for commodities, and particularly oil, which is a welcome development for a sector often hit by strong prices for energy.

“General purchasing activity has also been slower as stocks remain at steady levels and manufacturers have what they need.”

Manufacturing production rose for the 20th successive month in November, though the expansion was slower than in the first half the year and the trend in new export orders remained subdued. Firms reported fewer orders from the EU, Russia and emerging markets.

The rate of job creation reached a four-month high, with the sharpest increase reported by SMEs.

Rob Dobson, senior economist at Markit, said: “The only real negative from the survey came on the export-side, with new export business suffering a further slight decline. Slower global economic growth is hitting sales to emerging markets, while a strong sterling-euro exchange rate is also stifling trade with the eurozone nations.”

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