UK manufacturing activity slowed in October, as the Purchase Manager’s Index (PMI) decreased to 54.3 points, dropping from the 2-year peak reached in September (55.5 points). The fall in value means slowing growth in the sector, but the manufacturing remains in expansion, in line with market expectations.
Purchase Managers reported that the volume of new orders rose for third consecutive month, reflecting higher demand from domestic and foreign markets.
However, the main factor in the latest survey is the impact of the devalued pound on companies in industry. The positive side is that export orders are rising because of the fall in value of the currency, which makes British products cheaper for foreign buyers. The negative side of the cheap pound are the rising import prices, which lead to one of the sharpest increases in the cost of procurement in the 25-year history of the survey.
The production prices and average selling prices rose to their 5-year highest values in October.
Last week, the National Statistical Office published data showing that the production fell by 1% in the third quarter, largely because of the sharp drop in output in July.
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