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| Manufacturing growth slows as weak pound pushes up prices Manufacturing growth slows as weak pound pushes up prices | |
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| Growth in the UK’s manufacturing sector has eased and the weak pound is further driving up firms’ prices, according to an industry survey. | Growth in the UK’s manufacturing sector has eased and the weak pound is further driving up firms’ prices, according to an industry survey. |
| The closely watched manufacturing purchasing managers’ index fell to 53.4 in November from 54.2 in October, according to the latest monthly snapshot from Markit/CIPS. A reading above 50 signals expansion; a reading below points to contraction. | The closely watched manufacturing purchasing managers’ index fell to 53.4 in November from 54.2 in October, according to the latest monthly snapshot from Markit/CIPS. A reading above 50 signals expansion; a reading below points to contraction. |
| The industry has been growing for four months, but growth has eased in output and new orders from the highs reached in September. | The industry has been growing for four months, but growth has eased in output and new orders from the highs reached in September. |
| Sterling, which has dropped sharply since the EU referendum in June, continues to push up manufacturers’ costs, prompting them to raise their prices. Selling prices rose for the seventh month, and at a rate close to October’s 64-month high. This is further evidence that consumers face higher prices for food and household goods in coming months. | Sterling, which has dropped sharply since the EU referendum in June, continues to push up manufacturers’ costs, prompting them to raise their prices. Selling prices rose for the seventh month, and at a rate close to October’s 64-month high. This is further evidence that consumers face higher prices for food and household goods in coming months. |
| Rob Dobson, senior economist at IHS Markit, which compiles the survey, said overall manufacturing “remained in good health”. | Rob Dobson, senior economist at IHS Markit, which compiles the survey, said overall manufacturing “remained in good health”. |
| “Although the recent growth spurt showed further signs of slowing, the pace of expansion is still solid and above its long-term trend. This should be sufficient to ensure manufacturing is a positive contributor to fourth quarter GDP,” he said. | “Although the recent growth spurt showed further signs of slowing, the pace of expansion is still solid and above its long-term trend. This should be sufficient to ensure manufacturing is a positive contributor to fourth quarter GDP,” he said. |
| He said the expansion was underpinned by rising consumer demand and spending by businesses, but noted that the trend in new orders for investment goods such as factory parts and machinery had eased sharply in the fourth quarter. | He said the expansion was underpinned by rising consumer demand and spending by businesses, but noted that the trend in new orders for investment goods such as factory parts and machinery had eased sharply in the fourth quarter. |
| The weaker pound has boosted export orders, he said, but added: “The concern is that higher costs may in time offset any positive effect of the weaker exchange rate, especially given that export order book growth has already waned markedly from September’s five and a half year high.” | The weaker pound has boosted export orders, he said, but added: “The concern is that higher costs may in time offset any positive effect of the weaker exchange rate, especially given that export order book growth has already waned markedly from September’s five and a half year high.” |
| A recent survey from the Confederation of British Industry painted a similar picture. It showed order books were strong but warned that factory gate prices were rising at their fastest rate since early 2014. | A recent survey from the Confederation of British Industry painted a similar picture. It showed order books were strong but warned that factory gate prices were rising at their fastest rate since early 2014. |