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Manufacturing News, October 2017

A weaker exchange rate helped the manufacturing sector expand for the 14th month in a row in September, according to a survey of purchasing managers working in the industry.

 

The amount of growth in new export business was close to its highest level of the past six-and-a-half years, respondents said. They cited the fall in the pound since last year’s EU referendum as a reason for higher export orders.

 

The headline rate of the IHS Markit/Cips purchasing managers’ index fell slightly, to 55.9 in September, from 56.7 in August. Anything above 50 indicates expansion.

 

“Although it looks as if the sector made solid progress through the third quarter as a whole, the growth slowdown in September is a further sign that momentum is being lost across the broader UK economy,” said Rob Dobson, director at IHS Markit. He also pointed to increasing cost pressures on businesses due to the weak exchange rate and rising commodity prices as signs of a slowdown.

 

There were also indications in the survey that the expansion of the sector is leading to capacity constraints and shortages of raw materials. Mr Dobson said: “This will probably exert further upward pressure on prices, dent profitability and potentially disrupt production schedules in coming months.”