Monday 24th Oct 2016 - Logistics Manager

CIPS report shows manufacturing growth

UK manufacturing is moving out of recession at last, according to the Purchasing Managers Index produced by the Chartered Institute of Purchasing & Supply and Markit. The index showed a 3.8 point gain in October to reach 53.7 – that’s the third highest gain in the history of the series.

Companies indicated that higher levels of new business encouraged the restart of some production lines. There were also reports of market conditions starting to improve, despite remaining tough overall, and clients moving closer to restocking following a sustained period of inventory depletion.

The level of new export business rose slightly for the third month running in October, partly reflecting the weak sterling exchange rate but also improving overseas markets.
Looking ahead, the new orders-to-stocks of finished goods ratio – which tends to move in advance of the trend in production – rose to its highest level since data were first collected in January 1992.


David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, pictured, said: “It appears that the manufacturing sector has turned a corner and is starting to pull itself out of recession. After this long and deep downturn, manufacturers are now reporting strong growth in both output and new orders.

“One of the most positive developments noted by purchasing managers is that their clients are starting to restock inventories, which is encouraging them to restart production lines. This is important as it suggests the growth may be sustainable rather than a short term blip. Though the rate at which firms lay-off staff continues to ease, a turn around in the labour market is still some way off.”