Supporting the improvement in the PMI was a faster rise in production in October. Although still moderate, the rate of expansion in output accelerated to a six-month high and was accompanied by a quicker upturn in new business.
New orders across the manufacturing sector increased for the fifth consecutive month and the rate of growth quickened to the fastest since April. Firms noted that their clients were exhibiting less hesitancy in placing orders and market conditions had improved. Foreign demand also ticked up following three successive monthly contractions in new export orders, with new business from abroad rising marginally overall.
On the price front, cost burdens rose at only a modest pace at the start of the fourth quarter. Although some firms reported higher input prices stemming from the ongoing impact of tariffs, many suggested that subdued price pressures were often linked to price drops at suppliers, notably for metals.
Subsequently, average factory gate charges across the goodsproducing sector were broadly unchanged as manufacturers only partly passed on higher costs to clients.
At the same time, greater production requirements contributed to the fastest rise in workforce numbers since May. Some firms also noted that higher staffing levels were due to the filling of previously held vacancies. Backlogs, however, were unchanged in October following a three-month sequence of decline.
In line with stronger client demand, manufacturers registered a greater degree of confidence in output growth over the coming year. More favourable market conditions partially drove optimism to its highest level since June. Nonetheless, the overall degree of sentiment was below the long-run series trend.
Finally, despite a renewed rise in input buying, the stronger increase in new business meant firms increasingly dipped into stocks to ensure new orders were fulfilled in a timely manner. Therefore, pre-production inventories fell at the quickest rate for three months and stocks of finished goods decreased slightly.
