Manufacturers remain positive
The performance of the UK manufacturing sector remained solid at the end of the first quarter; although rates of expansion in output and new orders lost further impetus following recent highs, they remained above the respective long-run averages.
The domestic market was a key source of new business wins. The boost to export competitiveness from the weak sterling exchange rate also contributed to new work inflows.
The seasonally adjusted Markit/CIPS Purchasing Managers’ Index (PMI) slipped to a four-month low of 54.2 in March, down from 54.5 in February, but stayed above the neutral mark of 50.0 for the eighth successive month.
The latest PMI reading compared favourably to its long-run trend (51.6). The average over the opening quarter as a whole (54.7) was identical to the prior quarter’s near three-year high.
March saw the rate of increase in manufacturing production ease to its weakest during the current eight-month sequence of expansion. Sector data suggested that the slowdown was centred on consumer goods producers, with the pace of output growth in that industry only modest.
The outlook for the sector also remained positive, with business optimism rising to a ten- month high. Almost 52% of companies forecast increased production in 12 months’ time, compared to only 6% anticipating a decrease.