Production volumes have now increased for six consecutive months and the latest rise was the strongest since March 2015. Survey respondents noted that improving underlying demand and generally supportive domestic economic conditions had underpinned the rise in manufacturing output.
New order growth picked up to its fastest for 13 months in November. Anecdotal evidence suggested that increased sales to domestic clients had driven the latest upturn in new work. Meanwhile, new export orders rose only marginally, which manufacturers linked to competitive pressures and the strong dollar in particular.
Higher levels of incoming new business resulted in a further increase in unfinished work across the manufacturing sector during November. Moreover, the rate of backlog accumulation was the fastest since July, which some firms attributed to capacity pressures and stronger-than-expected sales. This contributed to a modest rebound in payroll numbers during November, although the pace of staff hiring remained slightly weaker than its post-crisis trend.
The latest survey revealed a robust expansion of input buying among manufacturing companies, which contrasted with the subdued purchasing trends seen during the first half of 2016. This partly reflected continued efforts to rebuild inventories. November’s survey marked the first back-to-back upturn in pre-production stocks since late-2015. Despite a strong upturn in purchasing activity across the manufacturing sector, latest data indicated that suppliers’ delivery times lengthened only slightly.
Meanwhile, manufacturing companies indicated that cost pressures remained subdued in November. The latest rise in input prices was softer than seen during the previous month and well below the longrun survey average. Average prices charged by manufacturers increased slightly, but the rate of factory gate inflation eased from the near-two year high recorded in October.