Manufacturing PMI brings cheer

Data from the Chartered Institute of Purchasing and Supply's (CIPS) Purchasing Managers' Index (PMI) showed a rise to 51.1 in September with price pressures easing. September saw a moderate expansion of the UK manufacturing sector, an improvement on the contraction signalled in the previous month. However, the underlying rate of growth through the third quarter of the year is well below the high reached at the start of the year. At 51.1 in September, down from a reading of 49.4 in August, the PMI posted above the neutral 50.0 mark for the first time in three months. However, September saw manufacturing employment fall for the third successive month, a trend that will not be helped by the recent announcement of 3000 BAE Systems redundancies. Rob Dobson, senior economist at Markit said the general improvement was partially down to the fastest depletion of backlogs of work for two years but this was only a temporary solution and the replenishment rate of order books would need to improve if manufacturing is to recover its forward momentum. CIPS CEO David Noble (pictured) believed the figures offered some relief after August's 26 month low but "we are still a long way off from celebrating". EEF chief economist Lee Hopley worried that weakening exports could be a sign of things to come, while Mark Lee, head of manufacturing at Barclays feared that major investment decisions were still being put off and takeovers shelved "as business owners revert to an increasingly risk adverse default position."