The IHS Markit/CIPS UK Manufacturing PMI® registered a third consecutive month of growth readings. August’s headline reading of 55.2, substantially improved on July’s 53.3 reflecting strengthened UK manufacturing output and the fastest increase in new orders since late 2017.
Manufacturing production rose at the fastest pace since May 2014, reflecting solid expansions across the consumer, intermediate and investment goods sub-sectors. The steepest growth was registered in the intermediate goods category, whereas investment goods producers saw the lowest pace of growth.
Underpinning the scaling-up of output was the fastest increase in new orders since November 2017. The domestic market remained the prime source of new contract wins, although new export orders rose moderately for the first time in ten months. Manufacturers mentioned improved demand from the EMEA region, North America and Australia.
Manufacturing employment, however, declined steeply across all three sub-sectors and all scales of businesses.
Inventories of purchased and finished goods both fell, despite a modest increase in purchasing activity, indicative of continued cost control and completion of business delayed by the lockdown.
Input price inflation accelerated to a 20-month high, with survey respondents citing reduced availability of some inputs and supply-chain disruption as a result of Covid-19. Exchange rates and increased freight costs were also mentioned as factors. Increases were partially passed on in selling prices, which rose at the fastest pace since March.
Business sentiment continued to be positive holding close to July’s 28-month high.