UK manufacturing growth slows

Will Green is news editor of Supply Management
1 December 2016

Growth in UK manufacturing slowed in November as the weak exchange rate continued to drive up input costs.

In response firms raised factory gate prices, raising fears this might offset any positive effect of a weaker pound on exports.

The Markit/CIPS UK Manufacturing Purchasing Managers’ Index eased to 53.4 in November, down on 54.2 in October and against the neutral reading of 50, which signals neither growth nor contraction.

Rob Dobson, senior economist at IHS Markit, said: “Higher costs are being felt at the factory gate, with selling prices rising to one of the greatest extents in the past five-and-a-half years.

“The concern is that higher costs may in time offset any positive effect of the weaker exchange rate, especially given that export order book growth has already waned markedly from September’s five-and-a-half year high.”

Companies said domestic and export demand were positive growth spurs in November, along with product launches, sales initiatives and clearing backlogs of work. In terms of exports, firms reported improved demand from the US, mainland Europe and the Middle East.

Strong inflation of input costs and factory gate prices was registered across the consumer, intermediate and investment goods sectors.

David Noble, group CEO, CIPS, said: “Purchasing activity remained strong, with the fourth successive monthly rise, in spite of costs rising at a pace close to last month’s six-year high.

“Suppliers remained under pressure for the seventh month running as delivery times grew longer, due to delayed distribution and a shortage of some raw materials such as steel, paper and timber products.”

He added: “A period of sustained growth and stability would be good for the sector after the highs and lows of this year.”

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