UK firms' costs are rising at the fastest pace since June, according to S&P Global's flash UK PMI for September, published on 23 September. Growth slowed to a three-month low at the same time. If you are about to fund your Christmas stock, that pairing matters. Your costs are going up before your sales do.
01What the September flash PMI shows
The PMI is a monthly survey of purchasing managers. A reading above 50 means activity is growing. These are the headline figures from the flash release:
- Private sector output: The composite index fell to 51.7 from 52.5 in August. That is a three-month low.
- Services: Business activity fell to 51.7 from 52.5.
- Manufacturing: Output fell to 51.4 from 52.1, a six-month low.
- Input costs: Cost inflation rose for a second month and reached its highest level since June. Firms reported higher energy, fuel and raw material costs.
- New work: Total new work fell slightly, after small rises in July and August.
Employment fell again, which means two years of continuous job losses. Business optimism was unchanged from August's six-month high.
Chris Williamson, chief business economist at S&P Global Market Intelligence, called it "a worrying combination of disappointingly sluggish economic growth and intensifying inflationary pressures".
02Why it matters if you are buying stock now
Paying a supplier in October for stock that sells in December is a cash gap. Rising costs make that gap bigger. Softer orders make it last longer.
Lenders read the PMI too. When costs rise faster than sales, a credit team looks harder at margins and cash flow. A forecast built on last year's supplier prices will not hold up.
03What to update before you apply
Three things are worth doing this week. Reprice your cost assumptions at today's supplier prices. Say how much of the rise you are passing on to customers. And show the lowest point in your cash flow forecast, with the facility that covers it.
Most retailers fund a seasonal order best with two facilities, not one. Our guide explains how to split a stock bill between a term loan and an overdraft.
If you need to fund stock, a contract or a busy season, bizbritain can look at your growth finance options across specialist lenders.
