Manufacturing supply chains 'starting to creak'

Will Green is news editor of Supply Management
1 November 2017

UK manufacturing supply chains are suffering under the strain of inflationary pressures and supplier shortages, according to the latest PMI survey.

Input prices increased to their highest level in seven months in October as commodity prices rose and firms competed for raw materials.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index edged up to 56.3 in October, compared to a revised 56 in September and against the no-change reading of 50.

Production and new order volumes continued to rise at robust rates across the consumer, intermediate and investment goods sub sectors, though growth was weakest for consumer goods.

The domestic market was the prime source of new contract wins, though export business also rose at a weak pace, with firms reporting new work from the US, mainland Europe, South America and Australia.

Duncan Brock, director of customer relationships at CIPS, said: “One note of caution surrounds the endless onslaught of inflationary pressures. Input prices increased to their highest level for seven months as commodity prices rose and intense competition for raw materials also had a cost impact.

“The rush to buy from depleting supplier stocks and significant delays in delivery times reported by almost a fifth of respondents showed that supply chains have started to creak under the strain.”

Rob Dobson, director at IHS Markit, said: “The continued robust health of manufacturing and rising price pressures will help cement expectations of the Bank of England hiking interest rates for the first time in a decade as Thursday’s announcement approaches.”

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