01 Nov 2016
UK manufacturing sector continues to grow
The UK’s manufacturing sector continued to grow in the first month of the fourth quarter, according to a recent survey of the industry.
The latest Markit/CIPS purchasing managers’ index (PMI) for manufacturing stood at 54.3 last month, above the 50 mark that says the market is growing, but down from September’s figure of 55.55.
The survey also commented on the current state of the pound sterling, saying that the weaker pound had boosted exports, but had also led to the price of raw materials increasing.
Rob Dobson, economist at Markit, said: “The UK’s manufacturing sector remained on a firm footing in October and should return to growth in the fourth quarter”.
He continued: “Despite slowing from September’s highs, growth of output and new orders continued to defy expectations, rising at marked rates and supporting the fastest job creation in a year”.
Price inflation for goods being bought by manufacturers reached its highest rate for more than five years during October.
Howard Archer, chief European and UK economist at IHS Markit, claimed that the Bank of England is unlikely to act further on the base rate of interest, stating: “The decent October manufacturing purchasing survey reinforces belief that the Bank of England will be sitting tight on monetary policy on Thursday after the November MPC meeting”.
However, not all analysts were so optimistic.
Samuel Tombs, of Pantheon Macroeconomics, claimed: “We continue to expect manufacturers to struggle to capitalise on the weak pound in the near term, given the usual delays involved in finding new business, renegotiating contracts and investing in extra capacity”.
David Noble, CEO at the Chartered Institute of Procurement and Supply, highlighted the impact of the weak pound on consumer prices.
“These price hikes resulted in manufacturers passing on higher prices to their customers as charges rose for the sixth consecutive month and to the steepest degree since June 2011”, he claimed.