MNI: UK May Manuf Output Edges Higher On Month: IHS Markit

--UK May Manufacturing PMI 54.4 Vs 53.9 in April

     LONDON (MNI) - UK manufacturing sector activity edged higher in May, the

latest IHS Markit/CIPS Purchasing Managers' Index (PMI) showed.

     The headline manufacturing PMI to 54.4 in May, up from a revised 53.9 in

April. April's figure was a 17-month low and May's rebound shows a step in the

right direction and also signals a twenty-second straight month of growth. 

     However, according to IHS Markit, the growth may be masking areas of

concern. Although growth in production was the best so far this year, it was

achieved more through the steepest build-up of finished goods inventories in the

26-year survey history and a sharp reduction in backlogs of work. This is backed

up further by the fact that incoming new business growth, whilst solid, was at

an eleven month low.  

     The softer trend in incoming new business growth was domestically generated

with softer increases in new work from the domestic market contrasting a slight

strengthening in overseas markets. Companies reported growth of new work from

mainland Europe, North America, China, India, South America and Africa. 

     It is also worth noting that the pace of job creation lost momentum in May.

The pace of staff increases was the lowest in fifteen months, with higher

staffing levels at investment goods producers partially offsetting job losses at

consumer goods producers.  

     Cost inflation also saw a rise as well as supply-chain pressures. Average

input prices accelerated for the first time since January and average vendor

lead times deteriorated to the greatest extent during 2018. 

     "At first glance, the mild acceleration in the rate of output growth and

rise in the headline PMI would appear positive outcomes given the backdrop of

the slowdown seen in manufacturing since the turn of the year. However, scratch

through the surface and the rebound in the PMI from April's 17-month low is far

from convincing," Rob Dobson, Director at IHS Markit, said.

     Duncan Brock, Group Director at the Chartered Institute of Procurement and

Supply added "...There are some darker development taking place, impacting on

new order and job growth and creating the lowest optimism for six months."

--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com

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

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