UK manufacturing expansion at 14-month low

Gurjit Degun
1 September 2014

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1 September 2014 | Gurjit Degun

The UK manufacturing sector saw output and new orders expand for 18 months in a row in August, but at a slower pace.

The seasonally adjusted Markit/CIPS UK manufacturing Purchasing Managers’ Index (PMI) recorded its lowest reading since June last year at 52.5, although still above the 50 baseline indicating growth in the industry. In July, the PMI posted 54.8.

Manufacturing companies said there was growth of new orders from domestic and overseas markets. But survey indices for output and new orders are now around seven points lower than at the beginning of the second quarter.

International demand for UK-manufactured goods increased for the 17th consecutive month in August. There was also further job creation, as employment rose for 16 months running, although the rate at which it increased hit a 14-month low.

The report added purchase price inflation “ticked higher in August,” reaching a seven-month peak, but remained low by the historical standards of the survey.

Rob Dobson, senior economist at Markit, said: “It is becoming increasingly evident that UK industry is not immune to the impacts of the rising geopolitical and global market uncertainty, especially when they affect economic growth and business confidence in our largest trading partner the eurozone.

“It therefore looks as if manufacturing will provide a lesser contribution to the UK economic growth story in the third quarter than at the start of the year.”

David Noble, group CEO, CIPS, added: “The 15th consecutive month of growing supplier delivery times suggest that supply chains have not fully adjusted to the recovery and this may pose a long-term obstacle to manufacturers.”

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