Tuesday, August 11, 2020

UK manufacturing expansion continues in November

According to the latest Markit Purchasing Manger’s Index (PM), the UK manufacturing sector maintained its positive start to the final quarter, with November seeing growth east only moderately from the recent peak attained in the prior survey month. However, the expansion remained firmly centred on large companies, as the trend at SMEs stayed lacklustre in comparison.

Manufacturing production expanded for the thirty second successive month in November, underpinned by rising levels of incoming new business. Although the rates of growth signalled were weaker that in the prior survey month, they remained above the respective long-run series averages.

By sector, the strongest expansion in output was seen at consumer goods producers. Solid growth was also registered in the investment goods sector. Although the upturn continued at intermediate goods producers, the sector experienced a sharp growth slowdown in November.

The decrease in purchasing costs was especially marked, with the rate of deflation remaining among the fastest seen in the near 24-year series history. Lower input costs were generally linked to falling global commodity prices. Output charges were reduced for the third successive month, as companies maintained their competiveness by passing on – in part – the decrease in costs.

The trend in new exports business at UK manufactures continued to improve in November, as inflows of new work from overseas clients rose for the third straight month.

Rob Dobson, senior economist at Markit, said: “UK manufacturing is moving back into expansion mode during quarter four, as it starts to reverse the losses sustained in the prior quarter.

“Although the pace of growth so far is only very modest, it positions manufacturing as less of a drag on the broader economy. Robust service sector growth will nevertheless be needed to achieve the 0.6 per cent fourth quarter GDP expansion still needed to meet the 2015 growth target outlined in the Chancellor’s Autumn Statement.”

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