The PMI sat at 55.9 in September – down from August’s four month high of 56.7, but above its long-run average of 51.7.
Markit says that manufacturing production rose for the fourteenth month running in September, but the rate of expansion eased from August’s recent high, in tandem with growth slowdowns across the consumer, intermediate and investment goods sub-sectors.
Where an increase in output was registered, this was mainly due to rising intakes of new business. Although the latest gain in new orders was slower than the prior survey month, companies reported that demand remained solid in both domestic and overseas markets.
Growth of new export business also remained among the best registered over the past six-and-a-half years. There were reports of increased sales to Europe, the USA, China and Brazil. Some firms also mentioned an ongoing boost from the historical weakness of sterling.
Additional findings show that the outlook for the manufacturing sector remained positive, with more than 51% of companies expecting production to rise over the coming year. Optimism reflected efforts to expand overseas customer bases, improved efficiency, company expansion and investment plans and new product launches.
September also saw further job creation at manufacturers, although the rate of increase was slightly below August’s three-year record. Input costs and output charges both rose at faster rates in September. The upswing in purchasing costs was linked to rising commodity prices, the exchange rate and supply-chain constraints.
Says IHS Markit director Rob Dobson: “The latest PMI survey showed a modest deceleration in the rates of expansion in UK manufacturing production and new orders. Although it looks as if the sector made solid progress through the third quarter as a whole, the growth slowdown in September is a further sign that momentum is being lost across the broader UK economy.”
Adds Barclays head of manufacturing Mike Rigby: “Although slightly down from August’s high, manufacturers continue to report healthy order books and encouraging levels of new investment and employment keeping output in positive territory last month. Yet, at a time when we are seeing the fastest pace of innovation in technology there has ever been, it’s frustrating to see manufacturing still stuck in a period of low growth.
“The benefits of a weak sterling and an improving global economy may not amount to much for the sector unless it invests more to improve efficiency and ramp up capacity. With cost pressures remaining elevated and margins being increasingly squeezed, it’s only a matter of time before manufacturers raise prices which will likely impact the domestic demand that has been fuelling growth in the sector.”
