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UK CommentManufacturing PMI picks up somewhat at the end of Q3 - up to 53.8 in September

  1. Sentiment pulled higher by improvement in new orders and output
  2. Price pressure remains high
  3. Output index still points to further deceleration in manufacturing output growth
Sentiment pulled higher by improvement in new orders and output
The UK Manufacturing PMI increased to 53.8 in September from 53.0 in August (revised from 52.8). The outcome was quite a bit stronger than the consensus expectation of 52.5. Sentiment was pulled higher by improving growth in both output and new orders. The increase in new orders came as export orders, which saw a huge drop in August, regained some of the lost ground. Growth in domestic orders also saw some improvement. According to the survey, output growth improved due to an increased inflow of business, rebuilding of inventories and efforts to clear backlog of work. That said, the backlog of work fell for a ninth successive month. Employment growth increased somewhat compared with August, but remained rather subdued, as job growth at SMEs offset cuts at large-scale producers. The September survey also signalled a pickup in both input and output price growth, indicating that cost pressure remains elevated. Firms noted that the exchange rate, supply shortages and global inflationary pressure have led to cost increases. Business optimism improved from August to September, but remained below the historical average. Some companies noted that Brexit and exchange rate movements made forecasts less certain.
Output index still points to further deceleration in manufacturing output growth
Actual manufacturing output growth has been sliding since November last year and fell to 1.1 percent y-o-y in July. Despite the improvement in manufacturing sentiment in September, the PMI output index still points to a further slowdown in actual manufacturing output in the near term.

 


Source: Macrobond

 


 


Source: Macrobond


Source: Macrobond Disclaimer

Kari Due-Andresen

Chief Economist Norway

Norway and UK

kadu01@handelsbanken.no

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