MNI DATA: UK Nov Manufacturing PMI Sees Modest Acceleration

--CIPS/IHS Markit UK Manufacturing PMI 53.1 in Nov vs 51.1 in Oct

By Jamie Satchi

     LONDON (MNI) - The UK CIPS/IHS Markit manufacturing sector PMI rose two

points to 53.1 in November, reversing the bulk of October's decline. 

     Despite the rise, the PMI continues to signal impotent manufacturing

activity, with the reading among the lowest in the past two-and-a-half years.  

     "The November PMI provided a lacklustre picture of the UK manufacturing

sector, as ongoing global trade tensions and Brexit uncertainty weighed on

current business conditions and dampened the outlook for the year ahead," said

Rob Dobson, Director at IHS Markit.

     According to IHS Markit, the result is consistent with the manufacturing

sector making a neutral contribution to GDP growth over the final quarter of the

year. 

     In fact, Dobson said there was a "clear risk of output contracting" in Q4

failing a pick up in sentiment in December. 

     --DOMESTIC DRIVEN

     The November improvement was driven by output, orders and employment, which

posted healthier levels after declining in October. 

     Worryingly, the upward trend in orders was concentrated in domestic

activity while export activity, a gauge of external demand, fell for the second

consecutive month. 

     That's the first time the export component of the PMI has fallen for two

straight months since early-2016. 

     Companies attributed the export deterioration to "reduced client interest

from overseas and ongoing Brexit uncertainties," according to IHS Markit.

     Domestic orders were higher on account of "new product launches and client

stock-building", according to the PMI report, which suggests firms may be

building up levels of inventory to mitigate against any Brexit-related risks.   

     --CONFIDENCE FRAGILE

     The latest survey provided a mixed picture regarding the outlook for the UK

manufacturing sector. 

     On balance, companies remained confident, with 46% forecasting output would

be higher in one year's time and less than one-in-ten expecting a contraction.

     However, the overall degree of optimism dipped to a 27-month low, as

"Brexit uncertainty, exchange rate concerns and a slowing economy weighed on

confidence".

     --EMPLOYMENT HIGHER

     There was a tentative increase in hiring activity in November with the pick

up in staffing levels reflecting "increased activity, new product launches and

preparations for expected future demand". 

     Meanwhile, input prices continued to accelerate, although the pace of

increase was "relatively mild" compared to rates prevailing over the 30 months. 

     As in previous months, higher prices were attributed to higher commodity

prices, ongoing exchange rate effects and shortages for certain raw materials.

     There was anecdotal evidence from manufacturers that input buying and

stocks of purchases were being raised to guard against ongoing Brexit and

supply-chain uncertainties. 

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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