Acceleration in growth in April

Manufacturing News, Source : The Manufacturer
Published : 14 May 2007 12:41
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PERFORMANCE: Factory gate prices rose at a near record pace as companies offset costs

Manufacturing has achieved a noticeable acceleration in the rate of expansion of production during April as output rose at its fastest rate since September 2006. This was supported, says the April data from the CIPS/RBS PMI survey of the UK manufacturing sector, by robust growth in the amount of new work received. Manufacturers maintained a solid degree of pricing power, as average factory gate prices rose at a near series record pace. This reflected, in part, a further increase in cost inflationary pressures.

Despite the marked acceleration in output growth, the level of the seasonally adjusted Purchasing Managers’ Index (PMI) fell slightly to a three-month low of 53.9. The decline in the PMI was mainly the result of a weaker trend in the stocks of purchases component, which signalled the sharpest contraction in inventories for almost two years.

The seasonally adjusted New Orders Index remained comfortably above the no-change mark of 50.0 with a reading of 56.1 in April. Panellists attributed the rise in new work received to successful product launches and improved marketing activities. However, growth of new orders was predominantly centred on the domestic market.

Roy Ayliffe, director of professional practice at CIPS, said: “April saw a fairly weak performance from the manufacturing sector, compared to the first quarter of the year. Purchasing managers attributed the performance to the ongoing increases in input prices, particularly those of chemicals, polymer and timber. This has resulted in rising factory gate prices as companies look to offset the rising input costs.

“Nonetheless, the manufacturing sector did see pick-up in other areas with purchasing managers seeing improved demand from Europe, Asia and Africa.”

 

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