Growth in UK manufacturing slowed in August

A survey from Markit and the Chartered Institute of Procurement and Supply has suggested that UK manufacturing growth slowed slightly in August.

The UK manufacturing purchasing managers’ index (PMI) dropped to 51.5 in August, down from 51.9 in July. A PMI score above 50 suggests expansion but the latest figures fell below the average of 54.2 seen over past two-year period of expansion, with experts expecting a slight increase to 52.

Senior Economist at Markit, Rob Dobson, said the sector was unlikely to make any significant contribution to growth in the third quarter. He commented: “The UK manufacturing sector remains in a holding pattern, with production growth hovering around the stagnation mark and marginal job losses reported for the first time in 26 months.”

There was slight downturn in employment in August; following on from a consecutive 25-month period of job creation with most of the cuts falling on large-sized manufacturers. SMEs continued, on average, to see more people employed.

David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply said: “The sector was on a go slow trajectory this month, showing a disappointingly slow pace of growth, and barely moving from last month’s figure, raising fears this could be an entrenched situation developing in the next few months.

“Though there was still a modicum of production activity as output growth rose to a five-month high in response to new orders and in a marketplace mostly reliant on the domestic market as exports fell for the fifth month. Some respondents reported losing work to competitors in a lacklustre environment.

“The employment picture also lacked colour with a slight fall in employment. Corporates reduced staff numbers marginally, which was at odds with SMEs who continued to raise staffing levels in anticipation of a continued healthy growth in business.”

However, there was good news as the survey found there was a substantial drop in purchase prices during August, with average costs declining at one of the steepest rates for the past 16 years. There were marked reductions reported across the consumer, intermediate and investment goods sectors. This reflected a combination of lower oil prices, the strength of the pound and a wide range of raw materials being cheaper.

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