Growth of UK manufacturing production accelerated for the first time in seven months in October. Output rose in response to faster inflows of new business and a solid increase in new export orders. However, supply-side constraints and expected future input price increases led to a marked rise in purchasing and survey record growth in raw material stocks. At 54.9 in October, up from September's ten-month low of 53.5, the seasonally adjusted Markit/CIPS UK Manufacturing PMI rose for the first time since reaching a fifteen-and-a-half year high in May. The PMI has now remained above the neutral 50.0 mark for fifteen successive months.
Rob Dobson, Senior Economist at Markit and author of the UK Manufacturing PMI, said: "An improvement in the UK Manufacturing PMI for the first time since May's 15-year high will provide reassurance that manufacturing remained a driver of UK economic growth at the start of the final quarter. Rates of expansion in output and new orders strengthened following the sharpest gain in new export orders for five months, with the export performance of intermediate and investment goods producers especially robust.
"Looking ahead, business confidence, private investment spending and exports will be important to sustaining the recovery as growth derived from the public sector and consumers is hit by austerity measures and rising job insecurity. To this end, the October rebound in investment goods production and a sharp increase in manufacturing job creation provide early positive portents."
David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, added: "Exports are very much the engine of growth within manufacturing at the moment. Whilst it is very positive to see the sector expanding strongly again, it's difficult to predict the impact of fluctuations in export markets so the recovery may continue to be bumpy. What is clear is that manufacturing looks set to drive further GDP growth in Q4.
"New orders are providing manufacturing purchasers with a mandate to increase activity and hire new staff, but inevitably, there will be hard graft ahead as pressure on supply chains remains a big concern. The increased buying activity happening now is calculated to replace depleted stock and avoid expected input price increases, which are already passed on to customers."