CIPS News


Manufacturing PMI running out of steam

CIPS 4 May 2011

Manufacturing PMI slows.

UK manufacturing PMI eased to seven-month low of 54.6 according to Markit/CIPS Purchasing Managers’ Index® (PMI®) 
Output price inflation remained close to March’s series-record peak while growth of total new orders slowed sharply and exports increased at faster pace.

David Noble, CEO of CIPS said, "The outlook for UK manufacturing is definitely bleaker than it was at the start of the year. The sector was racing ahead just a few months ago but there are now clear signs that it is running out of steam. Whilst the sector is still growing at a relatively healthy rate it is now so reliant on exports for growth that we have to be concerned about how sustainable this is.
“The marked slowdown in new orders in April will definitely send a shiver down the spine of many.  Much of the output growth came from manufacturers clearing the backlog of existing orders which is the equivalent of a consumer dipping into their savings to maintain their existing spending levels. The problem with this is that, just like savings, backlogs of orders will soon run out if they are not topped up.  The falling level of backlogs for the third consecutive month at the same time as new orders slowing really is a worrying sign.
“What we are clearly seeing is a tale of two markets at the moment. Export orders continue to grow at a very healthy rate but domestic demand is suffering as a result of falling consumer confidence and spending. There are some UK manufacturers that are growing very strongly but it tends to be those with a strong export focus and that can truly compete on a global scale. It’s clear that manufacturing businesses cannot rely on domestic demand to drive business in the next few months.
“Input price inflation eased again in April which will have relieved some of the pressure on purchasing managers. However, there was a sharp lengthening in supplier delivery times as a consequence of the knock-on effect from the Japanese earthquake and tsunami.”

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