Manufacturing sector ends year on three-month low

Paul Snell is managing editor at Supply Management
5 January 2015

UK manufacturing activity finished 2014 with a three-month low, as expansion in the sector continued to slow.

The Markit/CIPS Purchasing Managers’ Index (PMI) for the industry - where a reading above 50 indicates growth - recorded a figure of 52.5 in December compared with 53.3 in both of the two months previous. Last month's reading was only slightly higher than the 17-month low of 52.2 seen in September 2014.

Companies attributed new orders to product promotion, customer wins and increasing client confidence, as domestic demand continued to outpace new export orders. The continuing growth also led to more job creation and a fall in backlogs of work.

Input prices fell for the fourth month in a row, at the fastest for two-and-a-half years, with chemicals, energy, metals, oil and plastics, costing companies less.

“The positives to come out of the December readings are the continued growth, further solid increases to workforce numbers, a supportive domestic market that is driving new contract wins and the broad-base of the upturn across the consumer, intermediate and investment goods industries,” said Markit senior economist Rob Dobson.

“The main weak spot remains exports, with overseas new order inflows stagnating amid weaker economic growth in key markets and the ongoing lethargy of the euro area.”

David Noble, Group CEO, CIPS, said: “The picture is one of constancy and a good basis for operation for the sector in 2015 if the levels of risk and opportunity remain the same and the global economic landscape offers similar prospects.”

Martin Beck, senior economic advisor to the EY ITEM Club, said: “December’s CIPS manufacturing survey is disappointing, with the survey’s PMI recording its second lowest reading in 18 months and continuing a fairly consistent downward trend.”

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