Wednesday, November 02, 2005

Manufacturing Forecasts

BRITAIN’S manufacturing sector experienced its highest rate of growth so far this year last month, buoyed by rising export orders and strong output at factories.
The CIPS/RBS purchasing managers’ index, which provides a snapshot of the state of the sector, rose to 51.7 in October, up from 51.5 in September, on a scale where any number above 50 indicates expansion.
The index showed that growth was weakest in the consumer and intermediate sectors, while the investment sector was buoyant. Employment continued to fall. George Buckley, an analyst at Deutsche Bank, said: “Very modest manufacturing growth appears to have been sustained.”
The prices indicators in the survey told a familiar story, with manufacturers continuing to struggle to pass on soaring energy costs to customers.
The input prices indicator rose to 61.7, suggesting that costs for manufacturers continued to accelerate, but the output prices gauge fell to 51.5.
Equivalent surveys in Europe and the United States also showed robust growth in factory activity. The eurozone purchasing managers’ index (PMI) climbed one point to 52.7 last month, a 13-month high, while the US Institute of Supply Management index dipped to 59.1 from 59.4 the month before, indicating a smaller deceleration than had been expected.
China saw its PMI drop to 50.1, its lowest level in the survey’s 19-month history, suggesting near-stagnation in the industrial sector, although economists said that growth was likely to remain robust in 2006.
Times Online

Other reports point out that whilst production is increasing, higher cost levels have forced companies to cut labour to compensate, leading to further reductions in manufacturing sector employment.
Speaking with local steel strip producers in the last couple of weeks it seems that order intake is very unpredictable, with very quiet periods and frantic activity levels from week to week. This may well indicate that although manufacturing is fairly buoyant, many producers are finding it difficult to forecast and are placing orders only when they have a guaranteed requirement. This clearly presents difficulties for the steel industry which can have lengthy process times. It should however benefit service centres that have shown the foresight (or good luck) to be carrying the right inventories.

On a related subject It seems that a lot of ex Rover employees are finding jobs in the Engineering sector according to icBirmingham:-
Almost half of the people who lost their jobs when MG Rover collapsed or were made redundant among component suppliers have found new employment - many in skilled manufacturing jobs. This is according to David Cragg, regional director of the Learning and Skills Council.

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