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1 May 2014 | Gurjit Degun
The UK manufacturing sector continued to expand during April as the Markit/CIPS Purchasing Managers’ Index (PMI) rose to a five-month high.
The seasonally adjusted PMI for manufacturing recorded a figure of 57.3 in April – one of the highest readings over the past three years. This was also above the 50 baseline, indicating growth, and the 55.8 registered in March.
Manufacturing production continued its “upward surge” in April too, with the rate of expansion hitting an eight-month high and “remaining robust”. Growth improved across the consumer, intermediate and investment goods sectors, as companies responded to rising new order inflows, new product launches and efforts to clear backlogs of work.
April saw the rate of expansion for incoming new work speed up, as it increased to a three-month high. Respondents noted improved demand from both the domestic and export markets.
The positive performance led to more new jobs at manufacturing companies, as employment rose for the 12th consecutive month, almost as high as February’s near three-year peak.
Average purchase prices fell for the second month running, although the decline was only moderate in April. The report said this reflected a combination of lower costs for some metals and successful negotiations with suppliers. However, purchasing activity rose for the 12th consecutive month. Respondents pointed to higher demand for raw materials and resulting shortages of certain inputs and strain on supplier capacity leading to a further deterioration in average vendor performance.
Markit senior economist Rob Dobson said: "This places the sector perfectly to build on the robust 1.3 per cent expansion in manufacturing production reported by the first estimate of Q1 GDP. The output index from the PMI survey suggests manufacturing output growth in the second quarter may even breach 1.5 per cent on its current tack.”
CIPS group CEO David Noble added: “Input prices dropped again this month, giving manufacturers the power to increase their selling prices and allowing them to repair margins or improve profits. When it comes to pressure on suppliers, rising demand of raw material and capacity issues means the average delivery times continue to lengthen.”