UK manufacturers report ‘solid rebound’ in August

Activity in the UK?s manufacturing sector rebounded in August, according to the latest Markit/CIPS purchasing managers? index (PMI), released on Thursday.

The seasonally adjusted UK Manufacturing PMI stood at 53.3, recovering from the 41-month low of 48.3 registered in July following the EU referendum. A reading above 50 indicates that the sector is expanding.

?The Brexit brakes are off,? said David Noble, group chief executive at the Chartered Institute of Procurement & Supply (CIPS).

Manufacturing production rose at the fastest rate in seven months, following a contraction in the prior month. The increase in output was largely driven by export growth thanks to the weakness of the pound since the vote to leave the European Union.

However, there was a downside to the fall in the pound as manufacturers saw higher purchasing costs. Survey compiler IHS Markit said that input price inflation surged to a five-year high, with almost 44% of firms reporting an increase in purchasing costs.

Output prices also rose at the fastest pace for five years.

Commenting on the report, Rob Dobson, senior economist at IHS Markit, said: ?The August PMI data indicate a solid rebound in the performance of the UK manufacturing sector from the steep downturn that followed the EU referendum. Companies reported that work that had been postponed during July had now been restarted, as manufacturers and their clients started to regain a sense of returning to business as usual.?

Dobson went on to sound a cautious note on inflation, adding: ?It is too early to say whether the rebounds in growth and inflation will be sustained, but the upturn in August suggests that the weaker exchange rate and recent policy action have helped to avert a downturn.?

The August report also contained some good news for workers in the manufacturing sector, with employment rising for the first time this year. The higher staffing levels aided manufacturers? efforts to reduce backlogs of work, IHS Markit noted.