Markit/CIPS UK Manufacturing PMI®
- UK Manufacturing PMI at 55.5 in October
- Output and new order growth accelerate
- Price pressures remain on the downside
The start of the final quarter saw the UK manufacturing sector record its best month of output growth since June 2014, stepping out of the subdued trend experienced through much of the year-to-date.
The headline seasonally adjusted Markit/CIPS Purchasing Manager’s Index® (PMI®) rose to a 16- month high of 55.5, a noticeable improvement on the upwardly revised figure of 51.8 posted in September (originally reported as 51.5). The 3.7 point gain in the PMI level was one of the steepest registered during the near 24-year survey history.
October saw solid improvements in the rates of growth in output and new orders, in both cases the sharpest since the middle of last year. The domestic market remained the prime source of new contract wins, while back-to-back increases in new export business were signalled for the first time since the third quarter of 2014. Companies saw improved intakes of new work from clients in the Middle East, East Asia and the USA.
Sector data pointed to broad-based expansions of both output and new business during October, with rates of increase moving higher at consumer, intermediate and investment goods producers. However, the latest survey still provided evidence that growth is being driven by a narrow section of the manufacturing industry, as strong and surging growth at large-sized companies contrasted sharply with the more subdued expansion at SMEs.
Manufacturing employment rose for the thirtieth successive month in October, as improved new order intakes and efforts to clear backlogs of work encouraged firms to raise capacity. Large scale producers reported a robust increase in staffing levels, whereas SMEs saw little change in employment since September.
Price pressures remained on the downside during October, as highlighted by a further decrease in average input costs and an associated reduction in factory gate selling prices.
The rate of input cost deflation was only slightly slower than September’s 16-year record. Where a decrease was reported, this mainly reflected the ongoing reductions in global commodity prices. A wide range of raw materials were cited as being down in price, including metals, oil, oil-related products, plastics and timber.
David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply:
“The sector rode on the crest of an exports market wave taking full advantage of the opportunity to create a surge of output growth and new orders.
“Though domestically orders were still strong, it was export orders primarily from the Middle East, East Asia and the USA, that supported this expansion of work. Larger corporates were the overall winners more able to meet the demands of the overseas markets and employing more staff, as SMEs lagged behind with little change.
“With global raw material prices on a continuing downward path, purchasers increased their levels of stocks at a rate not seen for almost five years. So, if other sectors follow suit, there will be more conviction that UK economic recovery is at last ongoing and sustainable.”