British factories recorded an unexpected pick up in their activities in September stalling a three-month-long slow growth ahead of Brexit scheduled next year, according to a private data released on Monday (1).
The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) posted 53.8 in September, following an upwardly revised figure of 53.0 in August (originally published as 52.8). The PMI has remained above the neutral 50.0 mark for 26 months.
The end of the third quarter saw a mild improvement in the performance of the UK manufacturing sector. Rates of expansion in output and new orders gained traction, while the trend in new export business saw a modest recovery following August's solid contraction. On the price front, rates of input cost and output charge inflation both strengthened, the survey said.
UK manufacturing production rose for the twenty-sixth successive month in September, with the rate of increase rising to a four-month high.
September data signalled a broad-based improvement in business conditions. PMI readings for the consumer, intermediate and investment goods sectors all remained in expansion territory, with stronger rates of increase signalled in the latter two industries.
September saw a solid increase in new orders, reflecting improved inflows from the domestic and export markets. Foreign demand posted a mild recovery following the solid contraction registered in August, with companies linking growth to higher sales to the USA, Europe, Canada, Scandinavia and Russia.
UK manufacturing employment also increased at the end of the third quarter, as jobs growth at SMEs offset further cuts at large-scale producers.
Rob Dobson, Director at IHS Markit, which compiles the survey said, “September saw a mild improvement in the performance of the UK manufacturing sector. Domestic market demand strengthened, while increased orders from North America and Europe helped new export business stage a modest recovery from August's contraction. Business confidence also rose to a three month high.”
Business optimism rose in September, with over 53 per cent of companies expecting production to increase over the next 12 months. Firms' optimistic outlook was attributed to new capacity, organic growth, improved sales, investment in new equipment and planned new product launches.
However, some manufacturers also noted that Brexit and exchange rate movements were making forecasts less certain.
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