Tuesday 25th Oct 2016 - Logistics Manager

16 year high for purchasing index


The CIPS/Markit Purchasing Managers’ Index for manufacturing hit its highest level since 1994 last month rising to 57.2.

Output rose for the tenth consecutive month in March. The rate of increase accelerated to its highest since July 1994 and the second-fastest in the eighteen-year survey history. Gains in production reflected improving economic conditions, increased intakes of new work and efforts to reduce backlogs.

The Index  has remained above the no-change mark of 50.0 for six successive months. The headline Manufacturing PMI is calculated from data on new orders, production, employment, supplier performance and stocks of purchases.

New orders rose for the ninth month in a row during March, with the rate of expansion only slightly slower than January’s six-year peak. Companies reported solid demand from both domestic and overseas markets, which they attributed to the recovery in global conditions, the launch of new product lines and clients rebuilding inventories.

The report said higher levels of production encouraged some firms to increase their buying activity in March. There were also reports that low stocks holdings were necessitating some purchases. Inventories of purchases fell only slightly as a result. Higher demand for raw materials led to a further marked increase in average vendor lead times.

David Noble, chief executive at the Chartered Institute of Purchasing & Supply, said: “To see such a fast paced recovery in the manufacturing sector is hugely encouraging. Exports are clearly a main driver of growth but we are also seeing recovery across the whole sector.

“Though there was a slight cut in employment, purchasing managers said these were mainly confined to larger firms and weren’t as much a reflection of dampened demand as much as an effort to reduce operating costs.”