Stronger growth in new orders drove a solid increase in the level of outstanding business at manufacturers. Robust client demand and signs of sustained pressure on capacities did not, however, lead to improved employment growth. The rate of job creation eased to an eight-month low as firms reportedly pushed for greater efficiency.
Price pressures within the factory sector intensified, with the rate of input cost inflation picking up to the fastest since June 2011. Cost increases were partly linked by producers to the introduction of tariffs. Moreover, greater client demand and higher raw material prices underpinned the quickest rise in average selling prices for almost seven years.
In line with greater production requirements, firms signalled the strongest rise in purchasing activity since September 2014. Survey respondents noted that lengthening delivery times was a key factor leading firms to ramp up their buying activity. Furthermore, average supplier performance deteriorated at the joint-fastest pace in the series history (on par with February 2014, when severe weather disrupted supply chains). Longer lead times were linked to demand exceeding supply but also partly attributed by panellists to new trucking regulations.