The latest CIPS/NTC Purchasing Managers Index (PMI) survey has shown a loss of momentum in the manufacturing sector for October, which was more pronounced than expected (Rob Dobson, NTC economist).
The index, which is seasonally adjusted to provide an overview of sector performance, pointed to a reading of 52.9 down from August s 56.0. This is the lowest reading for 2007 so far, although it is still above the 51.6 average.
The fall is mainly due to slower growth of production and new orders, which in turn has been affected by high output and input prices. Roy Ayliffe, director of professional practice at CIPS, said: Manufacturers are continuing to suffer from the rising costs of raw materials with many companies passing this rise onto their clients. Rate of input price increase was significantly higher than average, according to the index, supporting manufacturer reports of higher raw materials costs.
Quantity of purchases rose at a slower rate than in September, while the stock of purchases index identified a decrease in activity.
Employment figures for the manufacturing sector were seen to increase during October, accounting for an increased output. The rate was only slight, however, and below average.
Increases in new business as reported by manufacturers were focused on the domestic market, with export orders increasing only slightly. The slow economic growth in the US and EU may be partly responsible for this.