The seasonally adjusted Markit/CIPS Purchasing Manager’s Index (PMI) posted 52.7 in November, down from October’s 16-month high of 55.2 (originally reported as 55.5). The headline PMI has remained above the neutral 50.0 mark in each month since March 2013.
Manufacturing production expanded for the 32nd successive month in November, underpinned by rising levels of incoming new business. Although the rates of growth signalled were weaker than in the prior survey month, they remained above the respective long-run series averages
By sector, the strongest expansion in output was seen at consumer goods producers. Solid growth was also registered in the investment goods sector. Although the upturn continued at intermediate goods producers, the sector experienced a sharp growth slowdown in November
The decrease in purchasing costs was especially marked, with the rate of deflation remaining among the fastest seen in the near 24-year series history. Lower input costs were generally linked to falling global commodity prices. Output charges were reduced for the third successive month, as companies maintained their competitiveness by passing on (in part) the decrease in costs. November saw little change in staffing levels, as the trend in employment moved back close to stagnation following the solid job creation signalled during October. An increase in workforce numbers was recorded in the consumer goods sector, while modest cuts were signalled at both intermediate and investment goods producers.
The trend in new export business at UK manufacturers continued to improve in November, as inflows of new work from overseas clients rose for the third straight month. Companies reported improved intakes of new business from clients based in the USA, Germany, Sweden, Turkey, the Middle-East, Japan, China and also from other Asia-Pacific nations
Lee Hopley, chief economist at EEF, said: “The massive bounce in the figure last month wasn’t quite a blip, but the pace of activity appears to have moderated in November. While ongoing expansion in the sector signalled by today’s figure is to be welcomed, the positive trend isn’t broad based across industry and isn’t supporting sufficient confidence to prompt a return of employment growth.
“This lines up with what we’re hearing from manufacturers, with flagging world trade growth and the low oil price dragging on some sectors being partly compensated with brighter demand prospects from consumers.”
Rob Dobson, senior economist at survey compiler Markit, added: “UK manufacturing is moving back into expansion mode during quarter four, as it starts to reverse the losses sustained in the prior quarter. Although the pace of growth so far is only very modest, it positions manufacturing as less of a drag on the broader economy. Robust service sector growth will nevertheless be needed to achieve the 0.6% fourth quarter GDP expansion still required to meet the 2015 growth target outlined in the Chancellor’s Autumn Statement.”
