A PMI of 56.9 represented the second-highest level of activity in the industry in three years, and rose from 55.3 in July. All five measures of performance – output, new orders, employment, suppliers’ delivery times and stocks of purchases – showed an increase, with production seeing the steepest rise for seven months. This was underpinned by faster intakes of new work received.
New contracts predominately came from the domestic market, although exports remained strong, if down on July’s near-record high. The top export markets included mainland Europe, the USA, Australia and China, thanks in part to the relative weakness of the sterling exchange rate.
The job market saw its thirteenth straight month of growth, with August marking the quickest rate of increase since June 2014.
Size was no barrier to success, either, with growth reported across all sectors and amongst SMEs and large-scale manufacturers alike.
Purchase price inflation accelerated for the first time in seven months in August. However, the rate of increase remained well below the record high seen at the start of the year. Just under 31% of companies reported an increase in purchase prices, which they generally linked to the rising cost of commodities. Manufacturers’ selling prices rose at a solid, yet slower, pace.
Business optimism rose to a three-month high. The positivity was largely attributed to rising demand, new product launches, a stronger global economy and planned investment. Over half of companies expect output to be even higher in a year’s time, compared to less than 7% that forecast a decline.
Commenting on the data, Rob Dobson, director of IHS Markit, said: “The key question is whether this positive start to the second half of the year can be sustained. This is looking increasingly likely during the near-term, given the breadth of the expansion.”
“Today’s data confirm that UK manufacturers are looking beyond the Brexit negotiations to strengthening market opportunities in Europe and beyond, with the acceleration in manufacturing activity in August helping to provide some welcome offset to sluggish consumer demand at home,” added Ms Lee Hopley, chief economist at EEF, the manufacturers’ organisation.
"With the eurozone PMI hovering at a seventy four month high and sterling hitting eight-year lows last month, the buoyant demand picture seen across manufacturing supply chains is not surprising. As companies are translating these buoyant trading conditions into more jobs and increased investment plans, it seems that confidence levels are a far cry from levels reported a year ago.”
