September saw a moderate expansion of the UK manufacturing sector, an improvement on the contraction signalled in August.
However, the underlying rate of growth through the third quarter of the year is below the high reached in Q1, as the trend in new orders has become more subdued.
At 51.1 in September, down from a revised reading of 49.4 in August, the seasonally adjusted Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) — based on data compiled from questionnaires sent to purchasing executives in over 600 industrial companies — posted above the neutral 50.0 mark for the first time in three months. However, the average PMI reading in Q3 2011 (50.0) is down on those of Q1 (59.4) and Q2 (52.7).
According to a statement, manufacturing production rose in September, following the slight contraction signalled one month ago. However, a large part of the increase in output was only achieved through the fastest depletion of backlogs of work for two years.
After falling in the previous two months, total new orders rose slightly in September. Companies linked this to a modest improvement in domestic market conditions. In contrast, levels of new export business contracted at the quickest pace since May 2009 with reports of lower demand from the US, Europe, Asia and the Middle East.
Despite the gains in output and new orders signalled in September, trends in these variables over Q3 2011 as a whole were weaker than in the opening quarter. Moreover, Q3 saw new orders decline (on average) for the first time since Q2 2009.
September saw manufacturing employment fall for the third successive month. Job losses were linked to company restructuring, non-replacement of leavers and the continuing subdued underlying trend in new orders.