91̽»¨

Commenting on the latest which has decreased slightly to 51.5 from 52.5, Mike Thornton, national head of manufacturing at 91̽»¨, said: “The manufacturing PMI saw a slight monthly dip in September to 51.5, following August’s rise to a 26-month high. However, the headline figure remained above 50 for the fifth consecutive month, indicative that growth is steady but not stellar. 

“The impact of increased demand is also cascading into other indices, as seen in the uptick in input prices, output prices, and new orders also remaining above 50. This dynamic is enabling manufacturers to pass on costs to consumers and continue to rebuild margins that were previously eroded. But the employment index fell to 49.3, showing there is some hesitancy in recruitment decisions, most likely in anticipation of the upcoming Autumn Budget.”

He added: “The Chancellor’s long-awaited announcement of an industrial strategy and Green Paper in the Budget shows that investment and productivity are high on the government’s agenda. But, to ensure manufacturing continues to grow and thrive, the strategy must consist of a highly skilled workforce, investment in R&D, enhanced infrastructure and access to finance.” 

Tom Pugh, economist at 91̽»¨, said: “The dip in the manufacturing PMI in September is probably at least partly due to concerns about the Budget creeping in. Indeed, the future output index dropped all the way back to 70, reversing all the gains this year and following a similar crash in consumer confidence, despite the economic outlook not changing. If the Budget bark turns out to be worse than its bite then we are likely to see a rebound in the next few months. 

“That said, the jumps in the input and output prices balances will concern the MPC. Some of this is due to shipping disruptions but some will be due to higher wage costs. The good news is that as oil prices have fallen back sharply in recently, these balances should also drop back. We still think the MPC will cut interest rates in November, but whether they go in December or not may depend on what signals they are getting on inflation in the pipeline from surveys like the PMIs.”