The UK manufacturing sector carried its strong third quarter performance into the final quarter with October seeing production and new orders rise at rates above their respective long-run averages.
The domestic market remained a prime source of new contract wins, while growth of new export business accelerated on the back of improving global market conditions.
At 56.0 in October, down from a revised reading of 56.3 in September, the seasonally adjusted Markit/CIPS Purchasing Manager’s Index (PMI) signalled an improvement in overall operating conditions for the seventh straight month.
According to a statement, total new orders rose at a rate close to August’s 19-year peak, as new export business increased at the quickest clip since February 2011. Companies reported improved inflows of new work from Asia, the USA, mainland Europe, Ireland, the Middle-East and Russia.
Growth of new orders, strengthening market conditions and stock-building led to a substantial expansion of production volumes in October. The rate of output growth nonetheless eased to a three-month low. Stocks of finished products, meanwhile, rose for the first time in over one-and-a-half years.
The increases in output and new orders remained broad-based in October, with growth of both registered in all nine of the narrow categories covered by the survey. The sharpest increases were generally seen in the chemicals & plastics, basic metal products and ‘Other’ manufacturing sectors.
Manufacturing employment rose for the sixth consecutive month in October. Although the rate of jobs growth eased from September’s 27-month peak, it was broadly in line with the average for the current sequence of increase.
Rob Dobson, senior economist at Markit said: ‘Despite only accounting for less than 11 per cent of the economy, the current strength of growth seen in manufacturing means the sector will still provide a major boost to the economy in October, boding well for the strong pace of economic growth we saw in the second and third quarter being sustained into the fourth quarter. The survey suggests manufacturing output is growing at a quarterly rate of around 1 per cent-1.5 per cent.
‘Maintaining this solid expansion will be important if we are to see any real signs of the economy rebalancing, as manufacturing remains 9 per cent smaller than its pre-crisis peak, while services have already closed the gap.’