UK Manufacturing Sector Expands Again, Pace of Growth Slows

--UK September Manufacturing PMI 55.9 Versus a Revised 56.7 in August

By Kieran Williams

     LONDON (MNI) - UK manufacturing sector activity slowed in September,

although still indicative of a pick up for the UK economy in the third quarter,

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

     The headline manufacturing PMI fell to 55.9 in September from a revised

56.7 in August and compares to the long run average of 51.7. The slight decline

still leaves the index in expansionary territory, and comes on the back of a

four-month high and the second highest reading in over three years in August.

The survey indicated that input price inflation has risen again, touching a

six-month high.

The survey suggests that while the slowdown in expansion was seen in most

sub-components, production and new orders both maintained above their long term

average rates and production has now risen for fourteen consecutive months.

New exports rose again, the report noting that new export growth hit the best

registered levels in the past six and a half years -- weakness in sterling is

adduced for the relative attractiveness of UK exports, though this effect is

said to be waning and the favourable base effect is likely to be less prominent

going forward.

"On balance, the continued solid progress of manufacturing and export growth is

unlikely to offset concerns about a wider economic slowdown, but the upward

march of price pressures will add to expectations that the Bank of England may

soon decide that the inflation outlook warrants a rate hike," Rob Dobson,

Director at IHS Markit, said.

     The report highlights the squeeze on suppliers and difficulty in meeting

delivery schedules, lead times saw the biggest rise since April 2011. "The blame

lay squarely at the feet of capacity constraints and some commodity shortages in

food, but also other materials such as plastics and steel," notes Duncan Brock,

the Director of Customer Relationships at CIPS, adding that inflationary

pressures will continue to be a concern due to supply constrictions and rising

employment.

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

--MNI London Bureau; +44 203 865 3809; email: kieran.williams@marketnews.com

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