The latest purchasing manager’s index from Markit and the Chartered Institute of Procurement and Supply shows a pick-up in British manufacturing, with stock shifted and new order levels increasing from September to October 2017.
A weaker sterling value has made industrial goods cheaper for export, though good made for domestic consumption have not experienced the same levels of growth., with a seven-month low in growth for consumer goods.
Markit’s PMI rose by a third of a point since September, 56 to 56.3. 50 points signifies no change. Over half of manufacturers expect further growth into this time next year.
IHS Markit/CIPS UK Manufacturing PMI for October 2017
Lee Hopley, Chief Economist at EEF, the manufacturers’ organisation, said: “Manufacturers had a stronger start to the fourth quarter than some forecasters were anticipating, with the latest PMI remaining significantly north of its long term average. Backing up what we’re hearing from industry, the investment and intermediate goods sectors are in the driving seat, with consumer facing sectors coping with challenged household incomes.
“Continuing the trend seen in survey data this year, strong production levels are continuing to translate into higher employment across manufacturing. Importantly, coming ahead of the MPC’s November meeting, indications of persistent price and capacity pressures would support the hawk’s view that the time is right for a rate rise.”
Stephen Cooper, Head of industrial manufacturing at KPMG, said: “The UK’s manufacturing industry remains resilient, with the latest figures marking 15 consecutive months of expansion. Behind the positive start to the final quarter of 2017 are strong domestic market conditions and increasing export business, with the sterling exchange rate likely to be the most significant contributory factor.
“The leaves however, are beginning to turn. Input costs have continued to rise, resulting in increased selling prices. As such, eyes will now be firmly fixed on the Bank of England’s interest rate decision, with a hike likely to impact investment decisions in the UK, as well as have potential implications for overseas demand.
“With the Chancellor’s Autumn Budget on the horizon, manufacturers will be eager to learn of any measures that may impact productivity, such as support for innovation as well as technical education and skills. Similarly, the ongoing Brexit negotiations continue to leave the industry wondering what lies around the corner. The outcome of these may well be a real test of resilience.”