Production growth continued to expand at the end of the third quarter, though the rate of growth was unchanged from August’s 14-month low. Nonetheless, a number of panellists suggested the rise in production was due to improved market conditions.
New orders received continued to increase in September. Anecdotal evidence linked the rise to strong client demand and greater marketing activity. That said, the pace of expansion of new orders eased for the second month running. The overall upturn was supported by higher export sales, which rose marginally.
Inflationary pressures intensified as input price inflation accelerated sharply. Moreover, the rate of increase was the fastest since December 2012. Panellists commented that raw material prices - notably for metals - were driven up after the recent hurricanes. Severe weather conditions also contributed to a further deterioration in vendor performance, with lead-times lengthening to the greatest extent since February 2015.
Firms generally passed on greater cost burdens to clients through higher charges. Although the rate of output price inflation reached a five-month high, it was moderate overall.
Backlogs of work continued to rise in September. The pace of accumulation was modest and broadly in line with that seen in August. To help ease capacity pressures, manufacturing firms increased staff numbers again. The rate of job creation was solid and the strongest in 2017 so far. In line with weaker new order growth, purchasing activity and stock of inputs both expanded at softer rates. Notably, pre-production inventories only grew fractionally.
Optimism remained robust, despite falling to a fourmonth low. Manufacturers linked positive sentiment to improved market conditions and planned investment.