The expansion of UK manufacturing production and new orders has continued in March, according to the latest survey by Markit/Chartered Institute of Purchasing and Supply (CIPS) monitored by Kallanish.

The performance of the UK manufacturing sector remained solid at the end of the first quarter. Although rates of expansion in output and new orders lost further impetus following recent highs, they remained above the respective long-run averages. The domestic market was a key source of new business wins. The boost to export competitiveness from the weak sterling exchange rate also contributed to new work inflows, Markit /CIPS says.

The seasonally-adjusted Markit/CIPS Purchasing Managers’ Index (PMI) slipped to a four-month low of 54.2 in March, down from 54.5 in February, but stayed above the neutral mark of 50.0 for the eighth successive month. New export orders rose for the ninth successive month.

Price pressures remained elevated during March. Output charge inflation ticked slightly higher, moving back towards the near record high reached in January. The pass-through of rising raw material costs was the main factor driving up selling prices.

March saw input costs increase at one of the quickest rates in the survey history, albeit the weakest signalled since last September. Companies blamed higher costs on the weak sterling exchange rate and rising global commodity prices.

Demand for steel in the UK market remains at a good level, Kallanish learns from sources. Prices continue to strengthen and the user market appears to be accepting the increases. Domestic EAF producers, where fed by locally-sourced scrap, are in the healthiest position from a raw materials viewpoint. Integrated producers however, reliant on both imported iron ore and coke/coking coal, will be soon feeling the squeeze, if they are not already so doing.