Markit/CIPS UK Manufacturing PMI released for September

The UK manufacturing growth rate slowed slightly in September, with the industry experiencing one of its weakest quarters for two years.

The UK manufacturing purchasing managers’ index (PMI) dropped slightly to 51.5 in September, down from the revised figure of 51.6 in August. The figure is still above the threshold rate of 50, which signifies growth.

The rate was slightly better than expected, however, with experts forecasting a drop to 51.3.

The survey also revealed that the stagnant market conditions had led to job losses in the manufacturing industry for the first since April 2014.

Rob Dobson, Senior Economist at survey compilers Markit said the manufacturing sector was “sluggish” due to “a triple combination of a sharp slowdown in consumer spending, weak business investment and stagnating export order inflows.”

Mr Dobson said: “The survey is still broadly consistent with stagnation, or even a mild downturn, when compared to official data.

“Although some respite will have been felt through a sharp decrease in average input costs, the steepest in over 16 years, the generally lacklustre operating environment nonetheless encouraged firms to scale back employment for the first in two and-a-half years. Job cuts send a signal that manufacturers are becoming more cautious about the future, which may lead to a further scaling-back of production at some firms in coming months.”

Mr Dobson said the subdued figures supported the notion that the Bank of England should keep the interests rates on hold, commenting: “The ongoing malaise of the manufacturing sector will add to broader growth worries and supports dovish calls for a first rise in interest rates to be held off until industry returns to a firmer footing.”

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