- PMI figures show muted December growth after November heights
- Weak sterling boosted overseas demand to detriment of domestic consumption
Britain’s manufacturing sector ended 2017 strongly, with output boosted by overseas demand.
The Purchasing Managers Index (PMI) showed a reading of 56.3 for the month of December. A score of 50 or above indicates growth.
While this was a decrease from the heights of 58.2 in November, it still results in the best quarterly figures since Q2 2014, with an overall average of 57 for the closing quarter of 2017.
Strong quarter: The much-watched Purchasing Managers Index showed a positive end to 2017
The results were driven by demand for intermediate and investment goods with consumer goods experiencing a rollback.
Rob Dobson, director at IHS Markit, the company behind the PMI figures said: ‘Rates of expansion remained comfortably above long-term trend rates.
‘The sector has therefore broadly maintained its solid boost to broader economic expansion in the fourth quarter.
‘The outlook is also reasonably bright, with over 50 per cent of companies expecting production to be higher one year from now,’ he added.
The effect of the Brexit vote on the value of sterling will prove a double edged sword over coming months, keeping exports attractive to international customers, but potentially ramping up supply chain costs and reducing domestic demand from the cash-strapped British consumer.
Jeremy Cook, chief economist at WorldFirst, explained: ‘December’s numbers show that UK manufacturing continues to chug along at a decent rate, buoyed by demand from export markets and domestic intermediate and investment sectors.
‘UK goods are on a Blue Cross sale at the moment courtesy of the weakened pound, but the news that providers to domestic consumers saw a slowing of demand will harden concerns for the outlook of the British shopper.’
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