Engineering news
More jobs were created in manufacturing at the beginning of the year as the sector's performance continued to strengthen, according to the latest PMI data from Markit/CIPS.
Companies were benefiting from new business from the domestic market, which offset lower new export order volumes, Markit said. Input costs and prices both fell over the last month.
The Markit/CIPS Purchasing Manager’s Index (PMI) rose to a seven-month high of 54.1 in February, up from 53.1 in January. By posting above 50.0, the PMI extended its run above the critical mark that separates expansion from contraction to two years.
February saw the rate of expansion in manufacturing production accelerate for the third month running, to its highest since June last year. Growth was led by the consumer goods industry, although solid expansions in output were also seen at intermediate and investment goods producers.
Manufacturers reported a further improvement in new order inflows during February, underpinned by rising volumes of new business from domestic clients. In contrast, export performance deteriorated for the fourth time in the past five months, reflecting subdued conditions in key markets and the strength of sterling.
There was an increase in manufacturing employment for the 22 successive month, Markit said. The rate of jobs growth accelerated to a three-month high and was broadly in line with the average for the “current sequence of expansion”, Markit said.
Companies reported that the ongoing upturn in the sector had encouraged further job creation, with workforce numbers rising at SMEs and larger firms. The sharp decrease in oil prices earlier in the year continued to filter through to manufacturers’ input costs during February. Average purchase prices fell at a substantial pace that was only slightly less marked than January’s 68-month record. There were lower costs for chemicals, energy, food raw materials, oil, oil by-products, plastics and timber. The strength of the pound was also reported to have reduced the cost of a number of imported goods.
Average output charges were reduced again in February, the second successive survey period where a decrease has taken place. As well as lower input prices, the reduction in output charges reflected rising competitive pressures.
Lee Hopley, chief economist at manufacturers' organisation the EEF, said: “Today’s PMI confirms that the UK manufacturing sector has seen a positive start to the year with accelerating activity raising hopes that output and employment growth will continue in 2015.
“The trends are particularly positive for consumer goods sectors, suggesting that the boost to demand resulting from the drop in the oil price is good news for many manufacturers. However, the PMI also confirms the challenges facing some manufacturers in the oil and gas supply chain – this chimes with our own quarterly findings which show that the impact is particularly evident in order books in the North West and North East regions.
“The persistent weakness in the export component is disappointing but, with small signs of improvement in activity in parts of Europe, a turnaround could be on the horizon.”
Chris Sumner, boss of Coventry-based robotics firm Fanuc, commented: “Today's Markit PMI figures on manufacturing output show a growth at the start of 2015.
“Savings made from lower oil prices, resulting in reduced energy costs, have been channeled into other areas of business such as recruitment.
“An investment in talent and the up-skilling of workforces to harness the power of robotics and automation, is increasing productivity and efficiencies throughout the whole manufacturing process, continuing to drive a growth in manufacturing output, specifically within the medical sector.”