Softer output growth was a key factor contributing to the decline in the headline PMI in August. The latest rise in production volumes was the weakest since the adverse weather-related slowdown recorded in January 2014. Manufacturers noted that softer new business growth and, in some cases, efforts to reduce finished goods inventories had weighed on their product requirements in August.
Overall new order volumes increased at a solid pace in August, but the rate of expansion eased since the previous month and remained weaker than March’s recent peak. A number of firms suggested that cautious spending patterns among clients had resulted in strong competition for new work. Meanwhile, export sales decreased slightly in August and the rate of decline was the most marked since April. Lower levels of new work from abroad were partly attributed to the strong dollar.
Job creation was sustained across the manufacturing sector in August, with manufacturers noting that new product launches and ongoing expansion plans had encouraged them to boost their payroll numbers. That said, the latest increase in staffing levels was the slowest since July 2014.
Input buying rose in August, but the rate of growth was little-changed from July’s 18-month low. This contributed to the slowest accumulation of preproduction stocks for just over a year. Meanwhile, input cost inflation remained relatively subdued, helped by falling oil-related prices. Although only modest, the latest rise in factory gate charges was the most marked since November 2014.