Stephen Cooper, head of industrial manufacturing at KPMG UK, comments on the Markit/CIPS UK Manufacturing PMI figures published today.
“This month’s UK manufacturing PMI results continue to show performance above the long-run trend, and with only 6 per cent of manufacturers anticipating a decrease in production over the next 12 months, optimism is high. Employment has once again increased, for the eighth consecutive month, painting a sunny picture for UK manufacturing.
“In addition, the Eurozone as a whole is showing an upward trend, posting results of 56.2 this month, largely driven by Germany, the Netherlands and Austria. We are seeing a different picture to September this year, where the UK was leading the Eurozone by 1.4 percentage points: this month, the Eurozone is 2 percentage points ahead of the UK. The Eurozone’s continued improvement is good news for British manufacturers, given its importance as our trading partner.
“However, beneath this optimistic veneer lies some notes of caution for manufacturers. The effects of the weak sterling exchange rate, as well as global commodity prices, has meant that input costs have risen again, at one of the quickest rates in history this month. Pressures on the supply chain have shown the greatest lengthening in vendor lead times, and this is also reflected across the Eurozone. The implication of lengthening lead times could be significant in terms of both cost and working capital requirements, and we encourage manufacturers to take steps to mitigate the effects of this.”