The index fell from 55.5 in September to 54.3 in October, slightly missing expectations for a reading of 54.5. However, it still remains on a “firm footing”, according to Rob Dobson, senior economist at Markit, with the longer average figure sitting at just 51.5. Dobson also predicted a return to growth in the fourth quarter of the year.
The effect of the depreciating pound against other major world currencies has helped manufacturers increase their export orders, the survey said, with orders from the USA, EU and China growing. However, there has also been a significant knock-on cost impact, with the devalued pound leading to a rise in the cost of commodities such as oil. Around 90% of respondents to the survey cited the poor exchange rate as a reason for an increase in average purchasing costs.
“Despite slowing from September’s highs, growth of output and new orders continued to defy expectations, rising at marked rates and supporting the fastest job creation in a year,” added Dobson.
Mike Rigby, head of manufacturing at Barclays, said that the figures show a resilient market post-Brexit. “UK manufacturers have taken the vote in their stride and are carrying on with business as usual, at least in the short-term,” he said. “That said, on the flip side, rising input costs are inevitable starting to feed in, squeezing profit margins which in turn could impact further on levels of inflation sooner than previously anticipated.”
