By Daniel Hunter
The UK's manufacturing sector grew to a four month high in November but remained lower than the strong numbers seen in the first half of the year, according to a closely watched survey.
The Markit/CIPS Purchasing Managers Index (PMI) recorded a score of 53.5. Any figure above 50 indicates growth in the sector; it is the 20th consecutive month in which manufacturing has grown.
Rob Dobson, Senior Economist at Markit, said: “In the lead-up to the Chancellor’s Autumn Statement, the November PMI survey shows the UK manufacturing sector continuing its solid expansion. Despite easing from the stellar pace set in the first half of the year, growth is still coming from a broad-base that will aid its sustainability. Production and new orders rose across the consumer, intermediate and investment goods industries and at SMEs and large companies alike."
Although slower than in the first half of the year, the expansions in manufacturing production and new business remained broad-based. November saw output and new orders increase in the consumer, intermediate and investment goods sectors and also across SMEs and large-sized companies.
Manufacturing employment increased for the 19th consecutive month in November, as the ongoing upturn in the sector continued to filter through to the labour market. Moreover, the rate of job creation recovered to reach a four-month high. The sharpest increases in employment were signalled by SMEs, although large-sized companies also saw a modest gain in headcounts.
Rob Dobson said: “The news on the domestic front was especially positive, with solid new order inflows from the UK market the main pillar supporting the expansion. This in turn encouraged manufacturers to raise employment at the fastest pace in four months. The only real negative from the survey came on the export-side, with new export business suffering a further slight decline. Slower global economic growth is hitting sales to emerging markets, while a strong sterling-euro exchange rate is also stifling trade with the eurozone nations.
“Apart from the underlying growth picture, a lot of focus remains on the trend in prices. On this score the latest survey suggests that price pressures in manufacturing remain subdued, with input costs falling for the third straight month and output charges rising only negligibly. Recent falls in oil prices should further help reduce manufacturers’ costs. Waning inflationary pressures in industry will continue to provide some leeway for the Bank of England to hold off from raising rates even as solid growth persists.”
Jeremy Cook, chief economist at the international payments company, World First, said: “Although growth in the manufacturing sector remains, the level of expansion remains to the lower side of recent performance.
“November’s release paints a similar picture to that seen in October, in that the domestic picture is solid and strong but growth in export markets - particularly in the EU and emerging markets - is worse; a function of weaker global growth and a strong pound making UK goods more expensive.
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