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Britain's factories report rise in production for March

04 April 2018

With global tensions high over trade issues, politics and tariffs, manufacturing has faced challenging times in the first quarter of the year. A reading above 50 shows growth in the sector.

The PMI had previously touched its highest level of 52 in November 2017, from its lowest level of 46.9 on June 30, 2017.

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Socio-Economic Research Centre executive director Lee Heng Guie said the PMI is another gauge to look at manufacturing activity. "The growth momentum of the Chinese manufacturing economy may have weakened in March, but at a marginal pace".

France saw unseasonably cold weather as well as snow in March, and the euro has been trading around a three-year high since the start of the year, which makes French goods more expensive to buyers from outside the euro zone.

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After remaining positive for the eight consecutive months, manufacturing sector activity in India declined in March to a low of five months, as the fresh business orders grew at a slower pace, and companies showed reluctance for recruitment, according to a private survey.

Rob Dobson, director at IHS Markit (Stuttgart: A1139A - news), said the survey showed United Kingdom manufacturing had "entered a softer growth phase so far this year". "The latest survey indicated that input price inflation was the highest for around four years, reflecting strong cost pressures for end users of steel and chemicals in particular". As the PMI fell, so did the new orders, production, employment, supplier deliveries and inventories indices. This is partly caused by the weaker Indonesian rupiah (against the USA dollar). Output levels rose in March due to stronger demand, with an expansion in foreign and domestic orders.

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Tuesday's PMI showed growth in cost pressures for factories and their selling prices cooled in March, something that may reassure Bank of England officials who are keeping an eye on inflation pressures. "Indeed, amid a slower expected pace of recovery in consumer spending, IHS Markit marginally downgraded its real GDP forecast to 7.3 per cent for the fiscal year 2017-2018", Dodhia said. The willingness of companies to restock waned as, apart from a slower expansion in output, the growth rates in stocks of finished goods and stocks of purchases also declined in March.

Britain's factories report rise in production for March