Thursday 17 August 2017

UK demand boosts exports in manufacturing sector

Exports were the highlight of the latest PMI findings. Stock image
Exports were the highlight of the latest PMI findings. Stock image
Colm Kelpie

Colm Kelpie

The rate of growth in new export orders in the manufacturing sector is at its strongest in more than 18 months, a survey has found.

But rates of expansion in output and employment in the sector overall have eased since the start of the year, according to the latest Purchasing Managers' Index (PMI).

And overhead rates continued their rise, putting pressure on firms. Businesses in the sector are facing the steepest jump in input prices since May 2011, with companies noting price hikes for raw materials including steel, plastics and resin.

Elsewhere, Britain's factory sector grew more slowly than expected in February, with slower growth in new orders and a drop in backlogs of work.

Philip O'Sullivan, economist at specialist bank Investec - which produces the monthly report - said the Irish data shows a further solid improvement in business conditions, albeit the pace of growth has slowed for the second successive month.

"Notwithstanding this moderation, the report shows ongoing strong client demand, with the new orders component continuing to point to sharp growth, while the rate of growth in new export orders improved to the joint fastest since July 2015," Mr O'Sullivan said.

"On the latter, we note that panellists again highlighted the UK as a particular source of demand."

The seasonally-adjusted PMI dipped to 53.8 in February, down from 55.5 in January.

New orders rose for the seventh month running, and at a pace that was much stronger than the series average.

Higher new orders fed through the production growth in February.

Growth of new business was also linked to a fifth successive monthly rise in backlogs of work.

Elsewhere, the Manufacturing Purchasing Managers' Index showed a slight easing in inflation pressures, which had been rising at a record pace after the tumble in the value of the pound triggered by the decision to leave the European Union.

The overall manufacturing PMI slipped to 54.6 from 55.7 in January. However, the figure remained close to December's two-and-a-half-year high.

Rob Dobson, an economist at IHS Markit, which produced the data, said the survey suggested manufacturing output growth close to 1.5pc in the first quarter.

"The big question remains as to whether robust growth can be sustained or whether it will continue to wane in the coming months," he said.

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