British manufacturers are showing resilience as production accelerates at its fastest rate in two years, with firms raising prices in response to mounting cost pressures including fuel and energy, according to a new survey.
PMI rises to 52.8 in October
The S&P Global UK manufacturing PMI survey, closely monitored by economists, recorded a reading of 52.8 in October, rising from 51.9 in September. Any reading above 50.0 signals that activity is expanding, while any figure below that threshold indicates contraction.
October's figure confirms that overall activity across the manufacturing sector has been on an upward trajectory for a full year. The rate of factory output even climbed to a 25-month high during October.
Stronger demand from domestic and international clients
Manufacturing firms reported stronger levels of new orders and improved demand from both domestic and international clients, including those in China, the EU and the US.
Rob Dobson, director at S&P Global Market Intelligence, noted manufacturing firms "showed resilience in the lead up to the autumn Budget". However, he warned the sector could face mounting pressure following the planned increase to the national minimum wage from April, which was confirmed in last week's Budget.
Cost pressures and delivery delays persist
"As well as higher wage costs, manufacturers are being buffeted by rising fuel, energy and transportation costs as supply-chain shocks and delays continued to drive up inflationary pressures," he said.
The PMI survey revealed that input costs – referring to the price of materials and components purchased by manufacturers – have been rising for nearly three years, and increased at the fastest rate last month since the spring. Companies reported that a portion of this rise had been transferred to customers through higher selling prices.
Manufacturers also continued to face extended delivery times due to the impact of shipping diversions, port congestion, material shortages and persistent disruption to crucial transport routes caused by global conflict. Some indicated that prolonged delivery times were becoming standard practice, the survey found.
