Sky-high PMI as UK manufacturing registers 'stellar' performance

At 56.7 in September, the Markit/CIPS Purchasing Manager's Index (PMI) remained in expansion territory for the sixth successive month, little-changed from August's two-and-a-half year peak of 57.1. Manufacturing production expanded for the sixth consecutive month in September, with the rate of increase staying close to August's 19-year high. The growth rate in incoming new orders also lost only minor impetus from a similar peak reached in the prior survey month. The domestic market remained the prime source of new contact wins. September data indicated that the growth in output and new order volumes was felt across the manufacturing industry, with all of the sub-sectors covered by the survey reporting increases in both. The level of new export business also rose in September, but only moderately and to the weakest extent since May. Companies reported higher demand from the US, Europe, Asia, Middle-East, Scandinavia, Latin America, Russia and Australia. Rob Dobson, senior economist at survey compilers Markit, described the industry as "continuing to boom". He continued: "These numbers are encouraging in respect to the rebalancing of the economy, with goods production likely to provide a major stimulus to economic growth in the third quarter. We would expect to see manufacturing output expanding by at least 1% in the three months to September and possibly by as much as 1.5%." However, with regard to exports, he added: "The main disappointment came in the form of a slower rise in export orders. With the exchange rate still around 20% weaker than before the financial crisis, we would expect to be seeing far stronger export gains than companies are currently reporting, especially with the eurozone showing signs of finally pulling out of recession." CIPS CEO David Noble (pictured) called the performance "stellar" with the domestic market remaining "the engine for growth". He went on: "Businesses will be hoping overseas demand, which rose moderately this month, can match that at home. This will be the key to unlocking continued growth." Lee Hopley, chief economist at EEF, added that there were reasons for caution, "the challenge of the whole supply chain ramping up production to meet growing demand given the persist weakness in investment", being one.