Manufacturing slows as firms hit by higher costs

Growth slowed from September's 27-month high
Growth slowed from September's 27-month high

Output in Britain’s manufacturing industry eased back last month as firms grappled with sharply higher import costs caused by the Brexit-hit pound.

The closely watched Markit/CIPS UK manufacturing purchasing managers’ index (PMI) said output hit 53.4 in November, down from 54.2 in October and below economists’ expectations of 54.5.

A reading above 50 indicates growth.

Growth slowed from September’s 27-month high when the industry rebounded from a significant slump in the wake of Britain’s vote to leave the European Union.

However, output and new orders remained solid, with rising consumer demand and business-to-business spending helping manufacturers push ahead.

Sterling’s post-Brexit vote fall sparked a rise in new business abroad, with demand increasing from America, mainland Europe and the Middle East.

Despite the export boost, the plunge in the pound remained a thorn in the side of firms, with average purchase prices rising at one of the fastest rates in the survey’s history and close to October’s near six-year high.

Rob Dobson, senior economist at IHS Markit, said the survey showed that the manufacturing industry remained in “good health” throughout November.

“Although the recent growth spurt showed further signs of slowing, the pace of expansion is still solid and above its long-term trend.

“This should be sufficient to ensure manufacturing is a positive contributor to fourth-quarter GDP.”

He added: “Eight-four per cent of manufacturers offering a reason for higher purchase prices made at least some reference to rising import costs due to the exchange rate.”