The latest Markit/CIPS purchasing managers' index (PMI) for the manufacturing sector reached a two-and-a-half-year high last month, rising to 56.1 in December from 53.6 the month before.
Companies benefited from stronger inflows of new work from both domestic and overseas clients, the latter aided by the boost to competitiveness from the weak sterling exchange rate.
Price pressures remained elevated in December. Rates of inflation for input costs and output charges both remained among the fastest seen during the survey history, albeit both slowing from October’s highs.
David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply said: "The impact of rising input costs continued to be felt, as the rate of cost inflation stood at one of the highest in the survey’s 25-year history. However, this did not deter manufacturers from leveraging their buying capability and increasing their input orders – the fifth month in succession. In fact, the rate of stock building reached its fastest for six years, partly to counteract future expected price increases in raw materials and any possible shortages in the year ahead.
“This fizz in new orders signals good news for UK manufacturers which has previously been hit by uncertainties following the EU referendum, and the sector looks set to reach a more robust growth path at the start of 2017.”
At Beavis Morgan, our specialist advisers to the manufacturing sector are able to assist with business growth and optimisation. Our Research & Development (R&D) tax credits team have also made a significant number of successful ‘money back for innovation’ claims on behalf of clients in the manufacturing sector.