Markit/CIPS UK Manufacturing PMI®
UK Manufacturing PMI hits 8-month high
· Growth of production and new orders accelerate
· Consumer goods remains the strongest performing sector
· Selling prices and input costs both fall further
UK manufacturers maintained their bright start to the year in March. The ongoing expansions in production and new orders both gathered pace, leading to a further rise in workforce numbers. Price pressures emanating from the sector also remained on the downside, as input costs and output charges both fell.
The seasonally adjusted Markit/CIPS Purchasing Manager’s Index® (PMI®) climbed to an eight-month high of 54.4 in March, ticking higher from 54.0 in February. The PMI has now remained above the neutral 50.0 mark for 24 consecutive months. Moreover, the average reading for the opening quarter as a whole (53.8) was the best growth outcome since the second quarter of last year.
Manufacturing production expanded at the fastest pace in nine months during March, underpinned by the steepest gain in incoming new business since July 2014. The strong domestic market remained the principal source of new contract wins.
There was also some better news for exporters in the form of a modest increase in overseas demand following a slight dip in February. Companies reported improved order inflows from a broad range of nations including the USA, China, Germany, the Netherlands, Canada and the Middle East.
The consumer goods sector continued to lead the upturn in the broader manufacturing sector, recording by far the steepest growth rates for both output and new business of the three main industrial groups covered by the survey. Indeed, consumer goods production rose at the fastest pace since last April.
Intermediate and investment goods producers also fared well during March. Although the outright rates of output expansion in both were moderate compared to the consumer goods sector, they were nonetheless solid and improvements on those signalled during February.
Manufacturing employment increased for the twenty-third consecutive month in March, with further job creation recorded at both SMEs and large-scale producers. Along with the increases in new orders and output, companies also linked higher workforce numbers to the clearing of backlogs. Outstanding business fell for the thirteenth straight month.
March saw a further substantial decline in average purchase prices, with the rate of deflation edging closer to January’s near six-year record. Lower purchasing costs were linked to exchange rate factors and the drop in oil prices earlier in the year. Subsequently, output charges were also lowered.
David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply:
“The manufacturing sector has provided further evidence that the UK economy is in rude health as the index continued to show positive growth, with a glut of new orders and with production ramping up.
Led by the domestic market, with some improved activity from export markets such as the USA, China, Germany and the Middle East, purchasing activity continued to quicken its pace, demonstrating ongoing buoyancy and confidence.
Levels of new business rose for the 25th successive month and rising to an eight-month high. The result was that suppliers were struggling to keep up, as the combination of fulfilment of manufacturers’ demand for inputs, logistical issues and intense competitive demands resulted in longer lead times and marginal supply chain pressures. The bright spot continued to be lower input prices where manufacturers protected their margins by taking advantage of the fall in oil prices.
Job seekers in the sector were offered continued hope as staffing levels rose again across the board – from corporates to SMEs. Increased numbers in employment supported the clearing of backlogs along with an increase in the speed of production growth.
It was the consumer goods sector who was the star of the show, indicating that confidence amongst consumers is swelling and leading to optimism for the months ahead that activity will be maintained.”
The April 2015 Report on Manufacturing will be published on: Friday 1st May 2015 at 09:30
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