United Kingdom manufacturing sector witnesses further solid growth at end of third quarter

Pound euro exchange rate

GETTYPound euro exchange rate Sterling is reeling from poor UK data

The British pound weakened against other major currencies in the European session on Monday after data showed that the United Kingdom manufacturing sector continued to expand in September, albeit at a slower pace compared to August. A reading above 50 shows growth in the sector. This is a little lower than the 56.7 from August, as growth slowed somewhat for September, but results for the sector are still above average, and both domestic and global demand remains strong.

The Việt Nam Manufacturing Purchasing Managers' Index (PMI) rose in September, with faster rises in output, new orders and employment on the back of stronger customer demand.

The report noted that "September data showed that output volumes rose at the weakest rate since the survey started in January 2016", blaming "a softening sales trend", reduced overtime work, input shortages and rising cost of raw materials.

"The annual MHA Manufacturing and Engineering report released last month found that despite the uncertainty from Brexit, the majority of businesses have achieved growth over the past 12 months and remain optimistic about the future", he said.

However, September's reading still marked the 14th straight month of rising production, thanks in part to new business, with companies reporting "solid" demand from both domestic and overseas markets. Some firms also mentioned an ongoing boost from the historical weakness of sterling, although this was less prominent as a factor than earlier in the year. However, the flipside comes in the form of the increasing cost pressures that manufacturers in the United Kingdom face from Sterling weakness, which in turn increases the cost of imports. Sales have increased to Europe, China, the USA and South America. Currency weakness was reportedly the main reason leading to higher input costs (the rupiah being under pressure - like other emerging market currencies - amid renewed United States dollar strength).

Canadian manufacturers indicated a solid degree of job creation in September, the report said, although the rate of employment growth eased from August's survey-record high.

"This is also happening alongside rising commodities prices, which are contributing to inflationary pressures across the supply chain".

"This will likely exert further upward pressure on prices, dent profitability and potentially disrupt production schedules in coming months", he added.

Higher new orders, and a subsequent rise in production requirements, encouraged firms to increase their purchasing activity at the end of the third quarter.

In August, Poland's PMI inched up to 52.5 from 52.3 in July.

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