CIPS News


Strong manufacturing growth continues in July

CIPS 1 August 2014

Output and new order growth slow but remain
above long-run trends
Output and new order growth slow but remainabove long-run trends

Manufacturing PMI at 55.4 in July
 Output and new order growth slow but remain
above long-run trends
 Payroll numbers raised further
The UK manufacturing sector started the third
quarter on a firm footing. Production and new
orders both continued to rise at robust, above longrun
average rates in July, encouraging further job
creation. However, the pace of expansion at
manufacturers cooled from the stellar growth spurt
seen during the first half of the year.
At 55.4 in July, down from 57.2 in June, the
headline seasonally adjusted Markit/CIPS
Purchasing Manager’s Index® (PMI®) posted its
lowest reading in one year, but nonetheless
remained well above the survey average of 51.5.
The PMI has now signalled an improvement in
operating conditions throughout the past 17
months.
Manufacturing production rose again in July, with
substantial rates of expansion being maintained
across the consumer, intermediate and investment
goods sectors. However, with growth also easing in
each of these product categories, the overall pace
of expansion slipped to its lowest in just over one
year.
The sustained growth in output volumes was again
underpinned by a marked uptick in levels of
incoming new orders during July. Companies linked
increased inflows of new work to the launch of new
product lines, price promotions, stronger economic
sentiment and rising demand from both domestic
and overseas clients. However, in line with the
trend seen in output, rates of increase in both total new orders and new export business were slower
than in June.
Job creation was recorded for the fifteenth
successive month in July, with broad-based gains
in payroll numbers seen in the consumer,
intermediate and investment goods sector and also
at SMEs and large-scale producers. However, the
rate of increase in staffing levels slipped to a ninemonth
low.
Average output charges and input costs both
continued to rise during July. Selling prices
increased for the thirteenth successive month,
reflecting improved inflows of new work and the
pass-through of higher input costs – which rose for
the third month running.
Increased purchase prices were linked to higher costs for metals, plastics and timber. There were
also some reports of suppliers raising their prices.
This was partly the result of bottlenecks at vendors,
as highlighted by the steepest lengthening of
supplier lead times for over three years.
David Noble, Group Chief Executive Officer at
the Chartered Institute of Purchasing & Supply:
“Manufacturing delivered a less remarkable batch
of results at the beginning of Q3 in an otherwise
vintage year. Export orders, output and
employment have continued their upward charge,
but the sector has lost some fizz, as all three return
to more pedestrian rates of growth this quarter.
Nevertheless, it’s a mark of how far manufacturers
have come that the lowest PMI in a year is still well
over the long run survey average.
“Growing demand from developing economies in
the Middle East, Africa and Asia have propelled
exports to the sixteenth consecutive month of
growth, whilst promotions and the launch of new
products helped to buoy domestic demand.
“Suppliers have arrived at an important crossroads
as they consider how to adapt to the lowest growth
in purchasing activity for 14 months. With supplier
delivery times growing faster than at any time in the
past three years, any further obstruction to supply
chains could constrain growth even further in Q4.”
The August 2014 Report on Manufacturing will
be published on:
Monday 1st September 2014 at 09:30

Markit/CIPS UK Construction PMI®

- Manufacturing PMI at 55.4 in July

- Output and new order growth slow but remainabove long-run trends

- Payroll numbers raised further

The UK manufacturing sector started the third quarter on a firm footing. Production and new orders both continued to rise at robust, above long run average rates in July, encouraging further job creation. However, the pace of expansion at manufacturers cooled from the stellar growth spurt seen during the first half of the year.

At 55.4 in July, down from 57.2 in June, theheadline seasonally adjusted Markit/CIPSPurchasing Managers' Index® (PMI®) posted itslowest reading in one year, but nonetheless remained well above the survey average of 51.5.The PMI has now signalled an improvement inoperating conditions throughout the past 17months.

Manufacturing production rose again in July, with substantial rates of expansion being maintained across the consumer, intermediate and investment goods sectors. However, with growth also easing in each of these product categories, the overall pac of expansion slipped to its lowest in just over one year.

The sustained growth in output volumes was again underpinned by a marked uptick in levels of ncoming new orders during July. Companies linked increased inflows of new work to the launch of new product lines, price promotions, stronger economic sentiment and rising demand from both domesticand overseas clients. However, in line with the trend seen in output, rates of increase in both total new orders and new export business were slower than in June.

Job creation was recorded for the fifteenth successive month in July, with broad-based gains in payroll numbers seen in the consumer, intermediate and investment goods sector and also at SMEs and large-scale producers. However, the rate of increase in staffing levels slipped to a nine month low.Average output charges and input costs both continued to rise during July. Selling prices increased for the thirteenth successive month, reflecting improved inflows of new work and the pass-through of higher input costs – which rose for the third month running. Increased purchase prices were linked to higher costs for metals, plastics and timber. There were also some reports of suppliers raising their prices.This was partly the result of bottlenecks at vendors, as highlighted by the steepest lengthening of supplier lead times for over three years.

David Noble, Group Chief Executive Officer at the Chartered Institute of Purchasing & Supply: “Manufacturing delivered a less remarkable batch of results at the beginning of Q3 in an otherwise vintage year. Export orders, output and employment have continued their upward charge, but the sector has lost some fizz, as all three return to more pedestrian rates of growth this quarter.Nevertheless, it’s a mark of how far manufacturers have come that the lowest PMI in a year is still well over the long run survey average.

“Growing demand from developing economies in the Middle East, Africa and Asia have propelled exports to the sixteenth consecutive month of growth, whilst promotions and the launch of new products helped to buoy domestic demand.

“Suppliers have arrived at an important crossroads as they consider how to adapt to the lowest growth in purchasing activity for 14 months. With supplier delivery times growing faster than at any time in the past three years, any further obstruction to supply chains could constrain growth even further in Q4.”

The August 2014 Report on Manufacturing will be published on:Monday 1st September 2014 at 09:30.

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