Higher levels of manufacturing production have been recorded since June 2016. However, the rate of expansion was only modest and eased to a nine-month low in June. Survey respondents noted that softer new business growth continued to act as a brake on production schedules.
Some firms noted that efforts to boost inventories of finished goods helped to lift output levels. The latest rise in post-production inventories was the fastest recorded since January’s survey-record high. Stocks of purchases also increased in June, with the rate of inventory accumulation the sharpest for four months.
New order books improved in June, but the latest increase was the weakest since September 2016. Reports from survey respondents cited subdued demand and renewed risk aversion among clients. Export sales increased only marginally, which
manufacturers linked to intense competitive pressures and a continued growth headwind from the strong dollar.
The latest survey marked four years of sustained employment growth across the manufacturing sector. However, the pace of job creation eased to its lowest since March. Companies reporting a rise in payroll numbers mainly commented on efforts to boost operating capacity and hopes of an upturn in sales. Just over one-third of the survey panel (35%) anticipate a rise in production volumes in the next 12 months, while only 2% forecast a reduction.
A key positive development for the manufacturing sector was a marked easing in cost pressures to their lowest since March 2016. Manufacturers noted that lower commodity prices had helped to alleviate input cost inflation in June. Factory gate charges also increased at a softer pace, with the latest rise only marginal and the weakest seen for seven months.