Latest data from CIPS/NTC indicated conditions in the UK manufacturing sector were relatively calm during February.
Though the headline seasonally adjusted CIPS/NTC Purchasing Managers’ Index (PMI) increased slightly to a level of 51.3, it remained only marginally above the critical no-change mark of 50.0.
The rate of output increase changed little from January’s 13-month low, despite solid growth during February.
The seasonally adjusted New Orders Index posted a reading of 49.9 – a level below neutral for the second month running. New orders for capital goods were significantly reduced compared to a month ago, whereas consumer and intermediate goods producers saw further growth.
February data indicated that inflationary pressure was still mounting, with the seasonally adjusted Input Prices Index posting a reading of 72.2 as purchasing costs soared as a result of higher prices for food products, chemicals, energy, metals, oil and plastics. Meanwhile, the Output Prices Index recorded a reading of 59.9 as the rate of increase in average factory gate prices rose sharply, reaching its highest since charges data was first collected in November 1999.
Manufacturing employment declined for the second month in a row mainly due to companies reducing their workforce in response to rising cost pressures and poor market conditions.
UK exporters reported a decline in new business from the US, mainland Europe and Asia. However, the seasonally adjusted New Export Orders Index showed only a slight decline from 48.4 in January to 49.1 in February.
“Although there was a slight improvement in the performance of the UK manufacturing sector, there are ongoing signs suggesting that it is still suffering from economic uncertainties,” said Roy Ayliffe, director of professional practice at CIPS.
“Purchasing managers commented that a scaling-back from capital goods producers in the investments goods sector was a significant factor. Meanwhile, ongoing inflationary pressures affected employment levels and pushed-up factory gate prices at their fastest rate since the survey began. Moreover, as demands from clients in the US, mainland Europe and Asia also weakened it is clear that such concerns are not just isolated to the domestic market.”
