The recovery in the manufacturing sector slowed in November but the rate of job losses also eased, with experts warning against too gloomy an assessment of the data.
According to figures from the Chartered Institute of Purchasing and Supply (Cips) published today, levels of manufacturing output and new orders rose in November, although at a slower rate than the month before.
The Cips/Markit Purchasing Managers’ Index for November posted a reading of 51.8, down from October’s figure of 53.4, prompting fears over the strength of the sector’s recovery. David Noble, Cips chief executive, said firms were being hit by increases in the cost of raw materials, which were having an impact on confidence. “That’s one of the reasons this growth has dropped off slightly,” he said.
But he cautioned against reading too much into the figures. “The manufacturing index was negative for many months, so it’s important it’s still in positive territory.
But growth has slowed, there’s no doubt about that, and globally the situation is very similar.”
The PMI has registered a reading above the neutral 50 mark in four out of the past five months. In November, job losses eased to their slowest rate for a year and a half, with total new orders rising for the fifth successive month. New export business rose at the fastest pace for almost two years, reflecting an increase in work from customers in mainland Europe, the US and Asia. The weakness of the pound was said to be boosting prospects for exporters.
Higher commodity prices led to a further increase in costs in November. Companies reported higher costs for metals, energy, oil and plastics. Output charges rose as manufacturers attempted to maintain their profit margins. “However, competitive pressures mean that the rate of inflation was only slight,” Cips said.
Noble said: “We are seeing signs of sustained optimism from our members internationally that manufacturing is starting to come out of a deep recession.” Of today’s figures, he added: “This is a blip and we’re still in growth territory: if we’d seen these figures six months ago we would have been pleased rather than worried.”
© PE Publishing, 1 December 2009
