UK manufacturing stabilises in December
The PMI results for December have recorded stabilisation, with the levels of production showing little change following previous back-to-back contractions.
The levels of total new work fell for a sixth successive month, with the increase in production mainly registering as companies clearing backlogs of work as opposed to new work levels.
New export orders rose for the first time in five months due to higher foreign demand from clients in Germany, East Europe and China.
Figures from the seasonally adjusted Markit/CIPS PMI recorded that the UK manufacturing sector PMI rose to 49.6 in December, this is up from 47.6 in November.Although we have seen a slight increase here, the PMI has nonetheless remained below the 50 no-change mark throughout 2011, which is the lowest recorded since 2009.
Commenting on the report, David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “There’s no denying that this year will bring both fresh and familiar challenges for the UK manufacturing sector. It is encouraging to see output remain steady last month after the declines of recent months, but with the sector highly exposed to a shaky Eurozone, and reports of softening demand - ironing out economic problems in key export partners will be critical to how the sector performs.
There are fragile signs of growth centred on some very specific parts of the sector where demand remains strong, particularly consumer and capital investment goods with some businesses even reporting record growth that defies the gloom. That said for every bright spot there is another business struggling to build momentum.
Falling input costs gave some businesses a little pre-Christmas respite compared to the record rises seen earlier in the year, but with competition restricting manufacturers’ pricing power the impact on profit margins is barely noticeable. The slight bounce in purchasing activity is likely to be short-lived as the pressure to reduce inventories and manage cash flow remains formidable.”
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