UK manufacturing growth slows to 26-month low

Will Green is news editor of Supply Management
1 July 2015

Growth in the manufacturing sector slowed to a 26-month low in June, according to a survey of buyers.

The Markit/CIPS UK Manufacturing Purchasing Managers’ Index fell to 51.4 in June, down on a revised reading of 51.9 in May, and against a no-change position of 50.

Manufacturing production rose in June at the slowest pace since April 2013, with consumer goods output expanding but production in investment goods falling and stagnating in the intermediate goods sector.

Domestic market conditions held up relatively well, with higher inflows of new business, but export orders fell on the back of subdued demand from Europe, in part due to the sterling exchange rate.

Average input costs rose for the first time in 10 months, with companies reporting higher prices for chemicals, oil, plastics and polymers, but the rate of cost inflation was moderate. Supplier delivery times lengthened, reflecting vendor capacity shortages and raw material availability issues.

After rising slightly in May, average selling prices fell in June for the fifth time in the past six months, against a background of increased competitive pressures. Output charges were lowered at SMEs but raised by large-sized producers.

David Noble, group CEO, CIPS, said: “Suppliers continued to struggle a little more, stymied by the double pressures of capacity shortages along with access to key raw materials which were in shorter supply. Longer delivery times were registered for the 25th successive month.”

Rob Dobson, senior economist at Markit, said: “The UK manufacturing sector had a disappointing second quarter overall. Growth trends in output and new orders were the weakest since the opening quarter of 2013, as a strong sterling exchange rate and subdued demand from mainland Europe offset the continued solidity of the domestic market.”

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