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UK Manufacturing Growth Slows In September

UK Manufacturing Growth Slows In September

2 October 2017, 18:01
British manufacturing sector growth moderated at the end of the third quarter, while price pressures built up on strong pound and higher commodity prices. The IHS Markit/Chartered Institute of Procurement & Supply factory Purchasing Managers' Index fell more-than-expected to 55.9 in September from a 4-month high of 56.7 in August, data from IHS Markit revealed Monday. The expected score was 56.2. Nonetheless, a reading above 50.0 indicates expansion in the sector. Manufacturing output rose for the fourteenth successive month in September, but the rate of expansion eased from August's recent high. The increase in output reflects rising intakes of new business. The latest gain in new orders was slower than the prior survey month, but companies reported that demand remained solid in both domestic and overseas markets. The outlook for the manufacturing sector remained strong as 51 percent of companies said they expect production to rise over the coming year. Optimism reflected efforts to expand overseas customer bases, improved efficiency, company expansion and investment plans. September saw further job creation at manufacturers, but the rate of increase was slightly below August's three-year record. Data showed that input costs and output charges both rose at faster rates in September. The upswing in purchasing costs was linked to rising commodity prices, the exchange rate and supply chain constraints. Increases in input costs were passed on to clients, leading to the steepest increase in output charges for four months. "The continued solid progress of manufacturing and export growth is unlikely to offset concerns about a wider economic slowdown, but the upward march of price pressures will add to expectations that the Bank of England may soon decide that the inflation outlook warrants a rate hike," Rob Dobson, director at IHS Markit, said. Despite the weaker PMI survey in September, Ruth Gregory, an economist at Capital Economics, said she remains confident that the manufacturing sector will stage a recovery in the third quarter and help overall GDP growth to gain a bit of pace in the second half of this year. 
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