The headline seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – recorded 50.3 during November. That was down from 51.5 in October, although above the crucial 50.0 no-change mark for a third successive month.

Manufacturing output increased for the second month running, with the rate of growth solid and the highest recorded since September 2011. Companies reported that production was raised to help deal with higher volumes of new orders seen during September and October.

On this theme, latest data showed that backlogs of work were cleared to the greatest extent since August. November’s survey indicated that volumes of new orders fell for the first time in three months. The modest reduction followed on from a record increase in October, and was reportedly a reflection of relatively weaker demand.

There was evidence that poor weather which led to some flooding also resulted in reductions in new orders. New export orders were also down in November amid reports of softer foreign demand for Vietnamese manufactured goods.

With production requirements continuing to increase during November, manufacturers again added to their payroll numbers. Growth in November extended the current run of employment expansion to four months, although the latest net increase was again modest.

Manufacturers also raised their purchasing activity, the third successive month that this has been the case.

Growth was again solid as companies sought to service higher current output. Stocks of purchases were also depleted, albeit only marginally.

On the price front, input costs continued to increase during November, reportedly the result of supply-side issues that led to a scarcity of raw materials.

Although solid, the degree to which input costs increased was the slowest seen since July. Moreover, vendors were also keen to improve their performance in the face of stock shortages.

Finally, manufacturers sought to protect margins by raising their own prices. November marked the second month in succession that an increase in output charges has been recorded, although competitive pressures ensured that the degree of inflation was only marginal.

Trinh Nguyen, Asia Economist at HSBC, said that “The slowdown of growth in the manufacturing sector reflects weakness of demand abroad.

The rise of headcount and quantity of purchases suggest that the outlook is rather optimistic. We expect demand from abroad should bounce back after a slump in November, although the pace of growth should still be modest due to lacklustre domestic demand.

With price pressures easing thanks to weaker commodity prices, manufacturers should feel some reprieved.