PMI shows a mixed story for UK manufacturing

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UK manufacturing growth eased in November after expanding in the previous month at the strongest pace in more than a year.

The story was mixed in terms of company size and goods. Large companies saw strong growth, while that of small and medium-sized manufacturers was uninspiring.

Similarly, the consumer goods sector fared better than intermediate goods. Stronger real wage growth and the unemployment rate recently falling to a seven-year low continues to support demand for consumer durable goods such as cars and major household electrical appliances. In contrast, the weakness of intermediate goods indicates that slower global economic growth has reduced foreign demand for manufactured inputs from the UK.

The PMI also showed that employment moved back close to stagnation, indicating that the second consecutive month of reasonably strong manufacturing growth wasn’t enough to encourage manufacturers to boost hiring. The main challenges currently facing manufacturers –the low crude oil price halting investment in the North Sea, and weak export demand flowing from slower growth – suggest hiring will remain weak in the coming months.

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