Uptick in UK manufacturing sector but growth ‘near-stagnant’

Paul Snell is managing editor at Supply Management
3 August 2015

The UK manufacturing sector continued to expand in July, increasing slightly faster than it did in the previous month.

According to the Markit/CIPS UK Manufacturing Purchasing Managers’ Index the sector recorded a figure of 51.9 in July, up slightly from the 26-month low of 51.4 registered in June. A figure above 50 indicates expansion in the sector.

The consumer goods sector was again the strongest performer, helping to offset contraction in the investment goods sector, and “lacklustre” growth in intermediate goods.

A further decline in new business from abroad led to a slowdown in the growth of new orders to a 10-month low, propped up by domestic business.

Input prices declined after June’s unexpected increase. The lower price of chemicals, metals plastics, textiles and foods was in part attributed to the effect of the sterling exchange rate on imported raw materials.

“Although an uptick in the headline PMI breaks the decelerating trend in UK manufacturing, growth remains near-stagnant and suggests that the sector is continuing to act as a drag on the economy,” said Rob Dobson, senior economist at Markit.

“The continued weakness of investment goods demand suggests that ‘rebalancing’ remains firmly in the rhetoric as opposed to reality column.”

David Noble, group CEO, CIPS said: “Raw material shortages continued at the forefront of the sector’s list of cause for concern as the number of different types of material shortages also increased.

“The capacity of suppliers remained under pressure, and a handful of respondents cited the Calais crisis as having an impact on lead times. But, this did not have a significant impact on supplies generally.”

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