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Further expansion for manufacturing, PMI shows

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Posted on 2/10/2013 by Wayne Brophy FCILT

There was more expansion for UK manufacturing last month, according to the latest UK Manufacturing Purchasing Manager’s Index (PMI) from markit and CIPS. This concluded a quarter that proved stronger than any since Q1 2011.

The index was at a seasonally adjusted 56.7, the sixth month of expansion in a row, and similar to the 57.1 seen in August.

September saw job creation reach a 28 month high, while there was also another month of expansion in manufacturing production.

There was a small loss of impetus for growth in new orders compared to August’s peak. When it came to winning new contrasts, most came from the domestic arena.

There were rises for every sub sector the survey covers when it came to the volume of new orders and level of output.

There was a moderate growth in new export business, with respondents revealing increased demand from places like Europe and the US.

Prices for output charges and input costs rose month on month. Manufacturers said they were paying higher prices for the likes of feedstock, commodities and paper, among other things.

Purchase price inflation was at a slower rate than that seen in August, but still higher than the average seen for the year so far.

Output charges were driven up mainly as a result of input costs rising, while reports came in of organisations raising selling prices for the protection or improvement of operating margins.

“The domestic market remains the engine for growth across all three sub sectors, boosting new business in the UK and giving manufacturers added confidence. Businesses will be hoping overseas demand, which rose moderately this month, can match that at home. This will be the key to unlocking continued growth,” commented CIPS’s CEO, David Noble.

“On the flipside however, increased demand has seen suppliers come under greater pressure and lengthening lead times. This has in part been caused by long shipping delays, particularly in raw materials, signalling the sector could be hit with further input price rises. For the time being however, firms on the most part have been able to pass these costs on and protect their margins.”

It follows August’s PMI being released on September 2nd this year.

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