March data pointed to a further moderation in output growth from the peak seen at the start of 2017. The latest rise in production was the slowest for six months, but still much stronger than the soft patch seen in mid-2016. Survey respondents noted that the improving domestic economic backdrop and rising spending from energy sector clients had helped to boost workloads in March.
New orders expanded at the slowest pace since October 2016, thereby signalling a sustained loss of momentum from the peak seen at the start of the year. Manufacturers cited greater caution among clients, alongside intense competition for new work and subdued export sales. March data pointed to only a marginal increase in new orders from abroad. Survey respondents commented on pressure from the strong dollar. In some cases, manufacturers attributed subdued export growth to a strategic focus on marketing and better sales opportunities in domestic markets.
Mirroring the trend for production and new orders, latest data revealed a sustained slowdown in growth of input buying across the manufacturing sector. Some firms commented on tighter inventory policies, which contributed to a near-stagnation in stocks of purchases in March. At the same time, postproduction inventories dropped for the first time since last September.
Meanwhile, suppliers’ delivery times lengthened to the greatest degree since February 2015, though weather-related transport disruptions exacerbated supplier delays.
Inflationary pressures picked up again in March, with manufacturers reporting rising prices for a metals and chemicals in particular. Higher costs resulted in the strongest pace of output charge inflation since late-2014.