Manufacturing growth hits four-year high

Will Green is news editor of Supply Management
1 December 2017

Growth in UK manufacturing hit a four-year high in November, according to the latest PMI.

The IHS/Markit CIPS Purchasing Managers' Index climbed to 58.2 in November, up on 56.6 in October and the highest reading since August 2013. A reading of 50 indicates neither expansion nor contraction.

Companies linked growth to stronger inflows of new orders, reflecting solid domestic demand and steeper gains in new export business.

Some firms noted higher sales to clients in Europe, the Americas, Asia and the Middle East. The weak pound continued to boost exports, though mentions of this effect were less prevalent than earlier in the year.

Production growth and new orders were registered across the consumer, intermediate and investment goods sub sectors, though investment goods producers saw the sharpest rise in orders since August 1994.

Duncan Brock, director of customer relationships at CIPS, said: "As the impact of the weak pound diminished, businesses were turning their attention to new opportunities, clients and investment as business optimism flourished from October’s four-month low.

"However, this increase in demand meant suppliers fared less well as delivery times continued to lengthen amidst the scrabble in demand and raw material shortages, leading to further rises in input costs for manufacturers, which were then passed on to customers."

Rob Dobson, director at IHS Markit, said: "Manufacturers have seen supply chain constraints and rising demand for raw materials overtake exchange rate effects as the primary motivator of price increases.

"The coming months should provide greater evidence on any impact that the recent interest rate increase from the Bank of England will have on reining in cost pressures."

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