New contracts boost Britain’s manufacturers
ACTIVITY in Britain’s manufacturing industry rose in October, as domestic demand drove a raft of new contracts and the weak pound helped to deliver further growth in export orders.
The closely-watched IHS Markit/ CIPS UK Manufacturing purchasing managers’ index (PMI) showed a reading of 56.3 for October, up from 56.0 in September and coming in above economist expectations of 55.9. A reading above 50 indicates growth.
It marked the 15th consecutive month of sector expansion, marking a strong start to the final quarter of 2017 as output and new order growth remained “robust”.
The news pushed the pound to its highest level against the US dollar since early October yesterday, up 0.2 per cent at 1.331. Sterling also rose 0.3 per cent versus the euro to 1.143, marking its highest level against the eurozone currency since early June.
Domestic demand was the main driver of new contracts, but export orders also continued to climb thanks in part to the sterling exchange rate, which has made UK goods cheaper for foreign clients.
Companies surveyed said they experienced new work from clients in the US and Europe as well as South America and Australia.
Duncan Brock, director of customer relationships at the Chartered Institute of Procurement & Supply, said: “While trade from export markets slowed slightly, orders from overseas continued to rise for the 18th month supported by a robust global economy.
“The pound’s fluctuating performance may have had some bearing on the softening in export orders but there were continuing good levels of demand from Europe and the US, so no cause for concern.”
However, the sterling exchange rate piled further price pressure on manufacturing, with input costs rising at their fastest pace in seven months and resulting in the steepest rate of selling price inflation since April.
The survey also noted that the pace of job growth was at its highest level in 40 months, as more than 50 per cent of manufacturers forecast that output growth would be higher in a year’s time.