UK manufacturing output surges higher in April

CIPS 1 May 2014

Growth of output and new orders accelerate

UK manufacturing output surges higher in April

- Manufacturing PMI registers 57.3 in April
(March: 55.8)
- Growth of output and new orders accelerate
- Input prices fall for second month running

April saw the UK manufacturing sector maintain its robust start to the year. At 57.3, the seasonally adjusted Markit/CIPS Purchasing Manager’s Index®
rose to a five-month high and registered one of its best readings over the past three years.

Manufacturing production continued its upward surge during April, with the rate of expansion remaining robust and hitting an eight-month high.
Growth improved across the consumer, intermediate and investment goods sectors, as companies responded to rising new order inflows, new product launches and efforts to clear backlogs of work.The rate of expansion in incoming new work remained elevated in April, accelerating to a threemonth high. Growth of new orders was attributed to improved demand from both domestic and export markets. The level of new business from overseas rose for the thirteenth successive month, reflecting stronger inflows of new work from North America, Europe, Asia and the Middle-East.

The ongoing upswing in the sector’s performance resulted in further job creation at manufacturers during April. Employment rose for the twelfth
consecutive month, with the rate of increase identical to February’s near three-year peak.

Hirings were initiated to expand capacity, meet higher production and accommodate rising demand. Part of the increase supported efforts to
clear backlogs of work. April saw average purchase prices fall for the
second straight month, reflecting a combination of lower costs for some metals and successful negotiations with suppliers. However, the latest
decline was only moderate and slower than that signalled in the prior month.

UK manufacturers maintained a degree of pricing power, as average output charges rose for the tenth successive month in April. Companies reported that selling prices were raised due to strong demand and efforts to improve operating margins. Output charges increased across the consumer,
intermediate and investment goods sectors.

Purchasing activity rose for the twelfth straight month in April. Higher demand for raw materials – and the resulting shortages of certain inputs and strain on supplier capacity – also led to a further deterioration in average vendor performance.

Subsequently, supplier delivery times lengthened for the eleventh consecutive month. Companies maintained a preference for reduced inventory holdings, as both stocks of purchases and finished
goods fell further.

David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply:
“Manufacturing continues to bask in the spring sunshine, with solid growth and mounting optimism for the months ahead. Building on the strong
performance of Q1, success was consistent across the consumer, intermediate and investment goods sectors. Supporting the robust expansion and new order inflows, employment numbers were boosted
even further this month; all of which are good signs of a sustainable upward surge in the UK economy more broadly.

“Combined with strengthening domestic demand, UK manufacturers have also been taking full advantage overseas. New export orders rose to a
three month high in April, with demand strengthening across all parts of the global economy, to include North America, Europe, Asia and the Middle-East.

“Input prices dropped again this month, giving manufacturers the power to increase their selling prices and allowing them to repair margins or
improve profits. When it comes to pressure on suppliers, rising demand of raw material and capacity issues means the average delivery times
continue to lengthen.”

The May 2014 Report on Manufacturing will be published on:
Monday 2nd June 2014 at 09:30.

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