Growth of manufacturing output remained solid in February, despite easing slightly to a three-month low. The sustained upturn in production was widely linked to greater client demand and increased order book volumes.
New business received by manufacturers expanded at a faster pace in February, with growth reaching a 13-month high. The steep upturn was commonly attributed to the aquisition of new clients and successful marketing strategies. New business from abroad also rose further in February, albeit at a slightly slower pace than January.
Improved inflows in new business and more favourable demand conditions were largely stated as key factors behind improved confidence among manufacturers in February. That said, the level ofoptimism was below the long-run series average. Inflationary pressures intensified in February.
Input prices increased at the fastest pace since December 2012, reportedly driven by supplier shortages and greater global demand for inputs. Supply chain delays were among the highest seen over the past three years. Where possible, panellists reported that costs were passed onto clients through higher charges. Factory gate price inflation accelerated to the fastest for over four years.
In response to sustained and strong growth in new work, goods producers increased their purchasing activity at a sharp rate in February. Despite this, preproduction inventories rose at the weakest pace for five months, as manufacturing firms reportedly used stocks to fulfil new orders. Finally, the rate of factory job creation strengthened to the third-fastest since June 2015 (after October and December 2017). Ongoing capacity pressures were also reflected in a further increase in the level of outstanding business.