UK manufacturing expansion continues but 'suppliers grapple with pace of growth'

Will Green is news editor of Supply Management
1 July 2014

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1 July 2014 | Will Green

UK manufacturing expanded in June to its second highest level in 40 months, according to a survey of buyers.

The Markit/CIPS UK Manufacturing Purchasing Managers’ Index hit 57.5 in June, up from 57 in May, and only bettered during the past 40 months by last November’s posting of 57.8. A reading above 50 indicates expansion.

The PMI has now signalled expansion for the past 16 months, and June saw “robust production growth maintained across consumer, intermediate and investment goods sectors”.

UK manufacturers reported more new work from Europe, Asia and the Middle East, and there was also mention of pushes into new markets and product launches, with the rate of increase in export orders at a five-month high.

Employment in the sector rose for the 14th successive month, with the steepest rate of job creation reported by SMEs.

Price pressures rose during June as average input costs increased for the first time since January, driven by costs in the intermediate goods sector, while supplier lead times also lengthened.

Rob Dobson, senior economist at Markit, said: “Sustaining the recovery will remain the key and, on this front, the news also remained upbeat. As a broader expansion is also a more sustainable expansion, the ongoing surging growth of output and new orders across capital, consumer and intermediate goods producers alike is exactly what is required. Solid job creation across these sectors and at both SMEs and large producers bodes well not just for manufacturing but for sustaining the broader economic upturn as well.”

David Noble, group CEO, CIPS, said: “On the price front, input prices rose slightly for the intermediate goods sector for the first time in four months. Added to this, heightened by shortages in raw materials, delivery times lengthened to the greatest extent in three years, indicating suppliers are grappling with the pace of growth and the demand it has brought.”

 

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