Engineering news
The manufacturing sector has seen its highest rise in rates since June 2014, as conditions continued to improve at the end of the third quarter, according to the latest Purchasing Managers Index (PMI) survey.
The survey of activity in the manufacturing sector produced by IHS Markit/CIPS found that UK manufacturing PMI rose to 55.4 in September from 53.4 in August- a reading above 50 indicates increase in production activity, and below 50 indicates reduction.
The domestic market remained a key factor in increased business acquisitions, while the weaker sterling exchange rate brought in orders from abroad, according to the survey. Manufacturers reported improved demand from clients in Asia, Europe, the US and certain emerging markets, the highest export rates seen since January 2014.
Manufacturing production rose strongly in September for consumer and investment goods sectors. A modest gain was also seen in the investment and intermediate goods sector.
The rebound in the PMI-level since its EU-referendum related low in July has been sufficient to make the third quarter average 52.3, the best during the year-to-date. This encouraged companies to hire additional staff during September. Employment rose for the second straight month, after declining throughout the earlier part of the year. Job creation was linked to increased capacity requirements, order growth, and the launch of product lines.
Purchasing activity also increased during September, with input buying volumes experiencing a two-year high. However, this exerted pressure on vendors, resulting in the steepest lengthening in supplier lead times since May 2011.
Higher import costs lead to a substantial increase in average purchase prices in September. Manufacturers passed on part of the rise to clients in the form of higher prices.
David Noble, group chief executive officer at the Chartered Institute of Procurement & Supply, said: “This month, manufacturing made up lost ground since the EU referendum, with a robust rise in new orders and production expanding at a pace not seen for over two years.
“Competition for raw materials also increased, along with input prices, as shortages in metals, chemicals and food were reported.
“Employment levels were moderately encouraging with the second monthly rise in a row in this post-referendum bounce. Firms sought to increase their competitive edge, with marketing activity and the launch of new product lines. It is difficult to say whether this solid rebound will be sustained, however, as there will potentially be more challenges and uncertainties ahead.”