Manufacturing has ‘sparkling end’ to 2017

posted by Francis Churchill
2 January 2018

Growth in UK manufacturing eased slightly in December, but it still marked a “sparkling end” to an uncertain year.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers' Index slowed to 56.3 last month, down from a four-year high of 58.2 in November.

The index has now recorded 17 consecutive months of growth, indicated by a score above the no-change mark of 50. The last three months of 2017 saw an average score of 57, making it the best performing quarter since the second quarter of 2014.

Duncan Brock, director of customer relationships at CIPS, said the manufacturing sector’s performance was encouraging, “showcasing a resilient response to the ebbs and flow of the year’s uncertainty with a sparkling end to a strong period of growth”. 

He added purchasing activity and new orders had “maintained a healthy momentum” in December, with domestic orders keeping pace with rising demand from the US, Europe and the Middle East.

“Supply chains paid the price of this success across all the sectors however, as suppliers were showing signs of strain under new and existing demand,” he said.

Companies reported scaling up production in response to a steady flow of new work and job creation increased for the 17th month in a row.

Output growth was strongest in intermediate and investment goods but slowed in the consumer goods sector.

Input costs rose again, albeit at the lowest rate for four months, with companies linking higher costs to raw material prices, input shortages, supplier price rises and exchange rates.

“Challenges over costs also remained… But the sector was confident enough to offset these higher costs by raising its own prices as clients were demanding and business optimism was high,” said Brock.

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