UK manufacturing growth eased slightly in August as output and new orders lost momentum, though business confidence strengthened and cost pressures showed further signs of moderating, according to the latest S&P Global purchasing managers’ index.
The seasonally adjusted UK manufacturing PMI slipped to a five-month low of 51.7 from 51.9 in July, but remained ahead of the preliminary estimate of 51.5.
The index has now remained above the 50 mark separating expansion from contraction for ten consecutive months.
Manufacturing output increased for a fifth straight month, although growth slowed to its weakest pace since April. New orders also rose, supported by improving demand from domestic and overseas customers.
Export orders increased for an eighth consecutive month, with manufacturers reporting stronger demand from China, the US, the Middle East and Western Europe.
Performance remained uneven across the sector, however, with small manufacturers recording declines in output and new orders while medium and large producers continued to expand.
The improvement also supported employment, which rose for a fifth consecutive month and at the fastest pace in two years as companies responded to stronger production requirements and order books.
Business optimism climbed to a six-month high, with almost half of manufacturers expecting production to increase over the coming 12 months. Companies cited improving market conditions, stronger expected sales and investment plans, though concerns remained around costs, the economic outlook and UK government policy.
Inflationary pressures also eased. Average purchase prices increased for a 32nd consecutive month, but at the slowest rate since February, while supplier delivery delays were the least pronounced for six months.
Factory gate prices continued to rise during August.
