Manufacturing sector continues to grow, albeit at a slower pace

The UK’s manufacturing industry continued to see steady growth last month, but there are growing signs of cost pressures for the sector.

The latest Purchasing Managers’ Index (PMI) posted a figure of 55.9 for September, with an increase in production, orders and jobs.

Particularly encouraging is the increase in sales in territories including the United States, Europe and China. Indeed, export figures are some of the healthiest seen this decade.

But despite strong demand both at home and overseas, the pace of growth had fallen compared with the previous month and there are signs that inflationary pressures are beginning to tell.

Rising commodity costs and currency fluctuations are putting renewed strain on the supply chain.

Mike Rigby, an analyst at Barclays Bank, said: “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.”

Duncan Brock, of the Chartered Institute of Procurement & Supply, echoed the feeling that the conditions could take their toll in the months ahead.

“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,” he said.

Different data samples have painted a somewhat contradictory picture of the sector’s performance in the past 12 months or so. Industry surveys have indicated a boost to output following the collapse in the value of Sterling, although official figures have tended to offer a more pessimistic outlook.

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