The latest Markit/CIPS Purchasing Managers’ Index (PMI) shows the performance of the UK manufacturing sector remained solid at the end of the first quarter, bolstered by a further boost from exports, but manufacturers are warned to not become complacent.
Whilst the PMI slipped to a four-month low of 54.2 in March, down from 54.5 in February, it stayed above the neutral mark of 50.0 for the eighth successive month. And although output and new order growth slowed, they remained above the respective long-run averages.
The domestic market was a key source of new business wins and the boost to export competitiveness from the weak sterling exchange rate also contributed to new work inflows.
Rob Dobson, Senior Economist at IHS Markit, says: “The survey data suggest that the goods-producing sector made a solid contribution to GDP during the opening quarter of 2017. However, it’s clear that the expansion will be less than the buoyant 1.3 per cent rise seen in the fourth quarter of last year.”
Duncan Brock, Director of Customer Relationships at the Chartered Institute of Procurement & Supply adds: "Between the EU referendum in June 2016 and the triggering of Article 50 last week, British manufacturers have completed a remarkable return to confidence.
“Despite the confident mood, the depreciation in Sterling which has supported exporters has come at a price. The reduced buying power of the Pound has led to the 11th consecutive rise in input costs with consumers feeling the effects in the form of higher prices on the high street. Supplier delivery times have also begun to lag, clogging up the supply chains of British manufacturing. With the rate of new order growth showing early signs of easing in March, manufacturers must act to ensure they are not locked into costly contracts. Now is not the time for manufacturers to rest on their laurels.”
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