UK manufacturing output decelerated unexpectedly in September as cost pressures intensified, finds latest survey

Factories' input costs also rose at the fastest pace in March, reflecting a spike in commodity prices

The PMI came in at 55.9, down from 56.9 previously (PA)

Manufacturing output decelerated unexpectedly in September and cost pressures intensified, according to the latest survey snapshot of the sector.

The Purchasing Managers’ Index for the month came in at 55.9, well above the 50 mark that separates expansion from contraction but down from 56.7 previously and below the 56.4 reading City of London analysts had pencilled in.

Factories’ input costs also rose at the fastest pace since March, reflecting a spike in commodity prices, something likely to help cement a Bank of England interest rate hike in November.

“With cost pressures remaining elevated and margins being increasingly squeezed, it’s only a matter of time before manufacturers raise prices which will likely impact the domestic demand that has been fuelling growth in the sector,” said Mike Rigby, an analyst at Barclays.

Deceleration...

“Manufacturing activity was subdued [in September], displaying a restrained pace of growth, barely moving from last month’s figure,” said Duncan Brock of the Chartered Institute of Procurement & Supply.

“Though optimism was buoyant, supported by business investment, this levelling of activity growth raises fears of a possible entrenchment developing over the coming months if economic conditions fail to improve.”

Manufacturing surveys have suggested a boost to output resulting from the slump in sterling in the wake of the Brexit vote in June 2016, but official data has been less promising.

...and divergence

(PA)

Manufacturing output, which accounts for around 10 per cent of GDP, contracted by 0.3 per cent in the second quarter of 2017 according to the Office for National Statistics, following 0.9 per cent growth over 2016 as a whole.