Manufacturing growth regains momentum
October saw the UK manufacturing sector record its best month of output growth since June 2014. The Markit/CIPS Purchasing Manager’s Index (PMI) rose to a 16- month high of 55.5 compared with 51.8 posted in September.
The 3.7 point gain in the PMI level was one of the steepest registered during the near 24-year survey history with solid improvements in the rates of growth in output and new orders. The domestic market remained the prime source of new contract wins but companies also reported improved intakes of new work from clients in the Middle East, East Asia and the USA. 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.
However, the latest survey shows that growth is being driven by a narrow section of the manufacturing industry, as strong and surging growth at large-sized companies contrasts sharply with the more subdued expansion at SMEs. Manufacturing employment rose for the thirtieth successive month in October with large scale producers reporting a robust increase in staffing levels, whereas SMEs saw little change.
Rob Dobson, senior economist at survey compilers, Markit, comments: “The revival provides a tentative suggestion that the manufacturers are pulling out of their recent funk, having been dogged by recession since the start of the year, and may help boost economic growth in the fourth quarter … the big question now is whether this bounceback is a one-off or the start of a sustained re-emergence from recession.”