Survey respondents cited an accelerated pace of new business growth and, in some cases, efforts to boost production in anticipation of stronger client demand in the months ahead.
In line with the trend for output volumes, latest data highlighted that incoming new orders picked up at the fastest pace for 12 months. Anecdotal evidence suggested that new product launches and stronger domestic demand had resulted in greater sales volumes. Nonetheless, some firms continued to report delayed decision making among clients, linked to uncertainty ahead of the presidential election.
Meanwhile, new export orders increased only slightly in October, but this was an improvement on the fractional decline seen during the previous survey period. Manufacturers mainly cited strong competition and relatively subdued demand patterns across key global markets.
Higher levels of incoming new work resulted in a greater degree of backlog accumulation across the manufacturing sector during October. The latest rise in unfinished work was the largest for 12 months. Some firms commented on increased capacity pressures at their plants, in part reflecting subdued job hiring in recent months. Latest data signalled only a moderate rise in payroll numbers, and the rate of expansion was weaker than in September. The latest survey indicated a robust upturn in input buying among manufacturing firms, which was linked to projections of rising demand and associated efforts to boost inventories. Moreover, the increase in purchasing activity was the fastest since June 2015. This contributed to a rise in preproduction stocks for the first time in 11 months. At the same time, finished goods inventories stabilized in October, which ended a four-month period of decline.
Manufacturers indicated that cost pressures intensified in October, with the latest increase in input prices the fastest for almost two years. Anecdotal evidence cited greater raw material prices and rising transportation costs. Meanwhile, factory gate charges increased for the first time in three months and the rate of inflation was the strongest since November 2014.