UK manufacturing sector in 'softer growth phase'

UK manufacturing output unexpectedly picked up last month but new order growth slowed, according to a survey of the sector by IHS Markit.

Markit's manufacturing purchasing managers' index rose to 55.1 in March from a revised 55.0 the month before, while economists had expected the PMI to slip to 54.7. A PMI index above 50 indicates growth.

For the first quarter as a whole, the manufacturing PMI averaged a reading of 55.1.

Compared to official data, Markit said this suggested the first quarter as a whole delivered a 0.4-0.5% gain in production volumes, considerably slower than the fourth quarter’s 1.3% growth.

Input cost inflation and output charges eased slightly in March though remained high.

Business optimism held steady at an elevated level, with over 54% of companies expecting output to expand over the coming 12 months.

“The latest PMI survey provided further evidence that UK manufacturing has entered a softer growth phase so far this year," said IHS director Rob Dobson.

"Although the pace of output expansion ticked higher in March, which is especially encouraging given the heavy snowfall during the month, this was offset by slower increases in new orders and employment. Average rates of increase over the opening quarter as a whole are also down noticeably from the growth spurt seen at the end of 2017."

He added: “The key question is whether growth can now be sustained, albeit at a lower level, into the coming months. On that front the news is generally positive. Manufacturers are still reporting solid inflows of new work from domestic and overseas markets."