The PMI posted 55.1 in March – little-changed from 55.0 in February – but above the neutral mark of 50.0. The average reading over the opening quarter as a whole (55.1) was the weakest in a year, suggesting that the underlying pace of expansion has been generally slower since the start 2018.
Markit says that manufacturing production rose for the twentieth successive month in March. The rate of expansion accelerated to the sharpest in the year-so-far, despite a moderation in growth of incoming new orders. Similar to the trend in the headline PMI, average rates of expansion in production and new business over Q1 were lower than in recent quarters.
In addition, companies continued to report solid inflows of new work from both domestic and overseas markets in March. New export orders rose for the twenty-third month running. The latest expansion in new export business was linked to successful marketing campaigns, a favourable exchange rate and improved sales volumes to existing clients.
Staffing levels also rose for the twentieth month running in March and outstanding business fell marginally during the latest survey month.
Meanwhile, price pressures moderated in March, with rates of increase in input costs and output charges both decelerating. Although purchase prices rose to the weakest extent in the year-to-date, the pace of inflation was still relatively strong.
Says HIS Markit director Rob Dobson: “The latest PMI survey provided further evidence that UK manufacturing has entered a softer growth phase so far this year. Although the pace of output expansion ticked higher in March, which is especially encouraging given the heavy snowfall during the month, this was offset by slower increases in new orders and employment. Average rates of increase over the opening quarter as a whole are also down noticeably from the growth spurt seen at the end of 2017. Compared to official data, the performance through quarter one is consistent with only a 0.4-0.5% gain in production volumes, a considerable slide from the fourth quarter’s 1.3% increase.
“The key question is whether growth can now be sustained, albeit at a lower level, into the coming months. On that front the news is generally positive. Manufacturers are still reporting solid inflows of new work from domestic and overseas markets. Business optimism is holding steady at an elevated level, with over 54% of companies expecting output to expand over the coming 12 months. With cost inflationary pressures also moderating to provide some respite for margins, the sector looks set to make further slow and steady progress as we head through the spring.”
IMAGE CREDIT: IHS MARKIT
