Manufacturing production increased at a robust and accelerated pace in October, with the rate of expansion the fastest for seven months. This reflected a reasonably strong upturn in new business volumes during the latest survey period.
New export sales continued to rise at only a modest pace in October, with survey respondents noting that the strong U.S. dollar remained a headwind to growth. Nonetheless, the latest rise in new work from abroad was the third in the past four months, and the fastest since September 2014.
Greater workloads placed pressure on operating capacity and contributed to another accumulation of unfinished work across the manufacturing sector in October. This in turn contributed to a rebound in employment growth from the 27-month low recorded during September.
Despite rising levels of incoming new work and an upturn in job creation, manufacturers remained relatively cautious in terms of their inventories of finished goods. Reflecting this, post-production stocks were lowered for the third month running and at the fastest pace since June 2014. At the same time, manufacturers sought to boost their stocks of purchases during October, with some citing expectations of rising workloads in the months ahead. Although only modest, the latest increase in pre-production inventories was the sharpest for almost a year.
Supply chain pressures persisted in October, as highlighted by longer delivery times from vendors. This was driven in part by greater input buying across the manufacturing sector over the month. Moreover, the latest expansion of purchasing activity was the fastest since June.
Manufacturers continued to benefit from falling commodity prices in October, with survey respondents widely commenting on reduced costs for steel and other metals. Measured overall, the latest fall in average cost burdens was the fastest since March. Meanwhile, manufacturers indicated that their factory gate charges rose only fractionally, with the rate of inflation the second-slowest for over three years.