UK manufacturing growth slows
1 min read
The UK manufacturing sector ended 2014 on "a softer footing", as December saw rates of expansion in production and new orders ease to the second slowest for over18 months. Price pressures also remained subdued, as input costs fell at a faster pace and selling prices moved only slightly higher, according to the latest Markit/CIPS Purchasing Manager's Index (PMI).
The PMI edged lower to 52.5 in December, down from 53.3 in both October and November. The average PMI reading over the final quarter as a whole (53.0) was only slightly below that in the previous quarter (53.1), but the weakest growth outcome in a year-and-a-half.
Despite slowing in December, the unbroken sequences of expansion in manufacturing production and new orders both extended to 22 months. The upturns also remained broad-based by sector, with concurrent growth in output and new business registered across the consumer, intermediate and investment goods industries.
Companies reported that product promotion, new customer wins and improved client confidence all contributed to the latest increase in total new orders. However, the domestic market remained the prime source of new contracts.
UK manufacturing employment rose for the 20th month in a row during December, with the rate of jobs growth little-changed from November's four-month high. Companies reported that the upturn in the sector and efforts to clear outstanding business had contributed to the latest expansion in workforce numbers. Subsequently, backlogs of work fell for the 10th straight month.
Rob Dobson, senior economist at survey compiler Markit, said: "Despite this end of year tapering, the sector still performed well over 2014 as a whole, with growth averaging at its highest since 2010.
"The positives to come out of the December readings are the continued growth, further solid increases to workforce numbers, a supportive domestic market that is driving new contract wins and the broad-base of the upturn across the consumer, intermediate and investment goods industries. The main weak spot remains exports, with overseas new order inflows stagnating amid weaker economic growth in key markets and the ongoing lethargy of the euro area.
"The price indices suggest that inflationary pressures remained contained, as input costs fell sharply and selling prices edged only modestly higher in December. Waning inflationary pressures in industry will therefore continue to provide some leeway for the Bank of England to hold off from raising rates if slower global growth persists."
