UK manufacturing sees improved demand at home and abroad

Gurjit Degun
3 February 2014

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3 February 2014 | Gurjit Degun

The UK manufacturing sector continued to see a strong upturn in production in January, with improved demand from the domestic market and new business from overseas.

The Markit/CIPS Purchasing Managers' Index (PMI) posted a reading of 56.7 last month, down from 57.2 in December, against the baseline of 50. Although the PMI currently stands at its lowest for three months, it indicates the sector is expanding and is still well above the series average of 51.3. The headline figure also signals an improvement in operating conditions for each of the past 10 months.

UK manufacturers noted improved demand at home, in North America, mainland Europe, Asia, Brazil, Scandinavia and the Middle East. The ongoing improvement in global market conditions drove the rate of increase in new export business to a near three-year record.

Average purchasing costs rose for the ninth consecutive month, reflecting higher prices for a number of inputs including timber and related by-products. The combination of higher purchasing costs and improved demand led to a further “solid increase” in average selling prices in January.

There was also further job creation at the start of the year as January saw employment rise for the ninth successive month. The rate of job growth remained close to November’s two-and-a-half year high.

Rob Dobson, senior economist at Markit, said: “Although the pace of output expansion has cooled slightly in recent months, growth is still tracking at one of the highest rates in the 22-year survey history. The broad base of the upturn is remarkable, with its benefits being felt across all product categories and at SMEs and large-scale producers alike.”

Group CEO at CIPS David Noble added: “The continued improvement in global market conditions has ushered in a broad based and fully fledged recovery in manufacturing. Sustaining growth close to November’s near record numbers, the makers’ march continued in January 2014, embodied by ever faster rates of new business growth and ongoing increases in employment levels.”

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