September saw the UK manufacturing upturn continue, as levels of output, new orders and employment all rose.
The outlook for industry also remained generally positive, with almost half of manufacturers expecting production to increase over the coming 12 months.
The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) posted 51.9 in September, up from 51.7 in August. The PMI has signalled expansion in each of the past 11 months.
Four of the five PMI components were at levels consistent with an improvement in overall operating conditions. Alongside the expansions in output, new orders and employment, there was also a further increase in average vendor lead times. In contrast, stocks of purchases contracted.
The end of the third quarter saw a slight deceleration in the rate of increase in manufacturing production, which rose at the weakest pace during the current six-month sequence of expansion. Companies continued to scale up output in response to rising new order intakes, with new work growing from both domestic and export markets (including the US, APAC region, Brazil and Australia).
UK manufacturers maintained a positive outlook for the sector in September, with almost half of firms (49%) forecasting output to rise over the coming year. That said, the degree of confidence was slightly below August's six-month high.
Reasons provided for positive sentiment included planned company expansions, new product launches, a hoped for rebound in market confidence and investment projects.
That said, several firms noted ongoing concerns about the geopolitical, macroeconomic and domestic policy outlooks.
Rob Dobson, Director at S&P Global Market Intelligence, said: “A disappointing September PMI saw the rate of increase in UK manufacturing production slow further. Output growth was its weakest seen over the past six months, with orders and exports growing only modestly. Slower demand growth was to be expected given the higher energy prices seen during the month.
"The big shift in September was in the survey's price measures, which switched from signalling a decline in inflationary pressures to a renewed uplift. After hitting conflict-driven highs earlier in the year, rates of increase in both input costs and factory gate selling prices accelerated for the first time since May. Energy and electronics prices remain especially elevated, while supply disruptions and rising diesel prices are now hitting transportation costs across industry. These price moves will be closely watched by the Bank of England for any signs of a more sustained and broader price uplift potentially taking hold.
“There are still some positive shoots of growth looking ahead, however, as manufacturers remain generally positive about the outlook. Almost half expect output to rise over the coming year. Confidence nevertheless remains subdued compared to that seen prior to the outbreak of the war in the Middle East, dampened not only by geopolitical issues but also reflecting uncertainty over policy direction at home. The upcoming Budget will therefore likely prove material in steering confidence.”
