A brighter outlook for manufacturing?

2003

Prospects for the UK's hard-pressed manufacturing sector may be looking a little brighter as new figures indicate the first growth in the manufacturing workforce for four years.

The Purchasing Managers' Index compiled by the Chartered Institute of Purchasing and Supply (CIPS) found that increased levels of new business in September had led to a small rise in employment in the sector.

The Employment Index stood at 50.7 in September on a scale where a score of more than 50 indicates expansion. This represents the first overall rise in the manufacturing workforce since October 1999.

Growth of new business was the principal driver of the PMI in September, and the rate of expansion was the quickest for seventeen months. The seasonally-adjusted New Orders Index rose sharply in September to 56.3 from a figure of 53.8 in August.

Firms reported that the origins of this latest growth were both domestic and international, driven in part by the competitive pricing of UK manufactured products at home and abroad. A key factor in this was the strength of the euro making domestically produced goods more competitive. New Orders also reflected the interest generated by the latest product developments.

The CIPS research appear to contradict figures released at the end of last month by the Confederation of British Industry in 45 per cent of UK manufacturing firms reported that orders were below average, with only 12 per cent saying they were above.

While growth in output eased in September, growth in the sector remained significant with some firms indicating that increased volumes had reflected efforts to take advantage of the recent decline in input costs.

The overall Purchasing Managers' Index, a composite indicator designed to provide an overall view of conditions in the manufacturing economy, rose to 52.9 for September - its highest since May 2002.

Roy Ayliffe, Director of Professional Practice at CIPS said: “As overall growth in the manufacturing industry continued during September, purchasing managers have been supporting their organisations to meet the demands of new business through strategic cost and inventory management. Also encouraging is the growth seen in employment which has increased for the first time since October 1999.”

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