UK manufacturing boosted by near survey-record growth of new export orders

CIPS 1 August 2017

The rate of improvement in UK manufacturing operating conditions accelerated for the first time in three months at the start of the third quarter.

IHS Markit/CIPS UK Manufacturing PMI®


  • UK Manufacturing PMI ticks up to 55.1 in July
  • Solid new order intakes boosted by strong export performance
  • Job creation among best recorded in past three years
The rate of improvement in UK manufacturing operating conditions accelerated for the first time in three months at the start of the third quarter. This was highlighted by the seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index® (PMI® ) rising to 55.1 in July, up from 54.2 in June.
The headline PMI was boosted by stronger inflows of new work, higher levels of production, improved job creation, longer supplier delivery times and a slight increase in inventory holdings.
The rate of expansion in new orders accelerated during July. However, the improvement in the pace of increase was still among the slowest registered over the past year. This was despite a significant boost from the trend in new export business, as foreign demand rose at the second-strongest rate in the series history, beaten only by that recorded in April 2010.
Companies reported improved inflows of new work from clients in North America, Europe, the AsiaPacific region and the Middle-East. The domestic market also remained a positive contributor to order books, although not to as great an extent as signalled earlier in the year.
Manufacturing production increased for the twelfth successive month in July. Although the rate of expansion eased to its lowest since March, it remained above the long-run survey average. The consumer goods sector saw the strongest increase in output, followed closely by intermediate goods producers.
The ongoing upturns in output and new orders encouraged further job creation in July. Staffing levels rose for the twelfth straight month. The pace of expansion was among the best registered over the past three years.
Cost pressures eased in July. Input prices rose at the slowest pace in over a year, and to a significantly lesser extent than the survey-record increase seen in January. Companies linked higher costs to increased raw material prices, the exchange rate and shortages of certain inputs.
Part of the increase in costs was passed on in the form of higher selling prices. Output charges rose for the fifteenth consecutive month. UK manufacturers maintained a positive outlook at the start of the third quarter. Almost 49% expect production to be higher in one year’s time, while only 5% forecast a contraction. Positive sentiment was linked to increased export order volumes, new product launches, efforts to improve market share and expand into new markets, global economic recovery and investment in new capacity.
Rob Dobson, Director at IHS Markit, which compiles the survey: “UK manufacturing started the third quarter on a solid footing. The headline PMI signalled a growth acceleration for the first time in three months during July, as new order intakes were boosted by a near survey-record increase in new export business. Although the exchange rate remains a key driver of export growth, manufacturers also benefitted from stronger economic growth in key markets in the euro area, North America and Asia-Pacific regions.
“Continued expansion is also still filtering through to the labour market, with the latest round of manufacturing job creation among the best seen over the past three years. “Price pressures also continued to ease in July, as the rates of input cost and output charge inflation both slowed further. Input prices rose at the weakest pace in over a year, down substantially from the record high seen at the start of the year. If this trend of milder price pressures is also reflected in other areas of the UK economy, this should provide the Bank of England sufficient lee-way to maintain its current supportive stance until the medium-term outlook for economic growth becomes less uncertain."
Duncan Brock, Director of Customer Relationships at the Chartered Institute of Procurement & Supply: “The manufacturing sector remained on terra firma this month, with a sustained rise in new orders, overall activity, new jobs, and with strong optimism to boot. “As overall production showed a further increase compared to last month, it was the powerful rise in new export orders, the strongest since April 2010 which was the biggest surprise. The weak pound and improving global economic conditions from North America to Asia Pac resulted in more business for the UK, though the domestic market also stayed resilient.
“There was good news for job hunters with one of the strongest rises in employment for three years and gains for the twelfth progressive month as manufacturers showed optimism for future business. There was also some light relief for purchasers as input price rises were less sharp than they have been for over a year and respondents increased future and bulk purchasing deals to rein in costs.
“Any downside to this now prolonged level of expansion is the strain on supply chains, as delivery times were stretched to the biggest extent since May 2011, and suppliers struggled to provide a number of key materials such as rubber, aluminium and some chemicals.”
For industry comments, please call: CIPS Trudy Salandiak Tel: +44 1780 761576 Email:

Page Loading
Page Loading
Page Loading
Page Loading


This may take up to 30 seconds