Lens on 3 FTSE 100 industrial stocks as July manufacturing PMI slips further

Summary 

• UK’s July manufacturing PMI data indicated a continuing slower pace of growth.
• July’s PMI grew at 60.4, down from June’s PMI reading of 63.9 and much lower than May's record high of 65.6 PMI

The UK’s Manufacturing Purchasing Managers' Index (PMI) data released today indicated a continuing slower pace of manufacturing activity growth in July.

The IHS Markit/CIPS July PMI stood at 60.4, down from June’s PMI reading of 63.9 and much lower than May's record high of 65.6 PMI reading.

However, July PMI data is still among the highest output recorded in the UK. A reading above 50.0 indicates manufacturing activity growth in the last month, while a reading below 50.0 indicates a contraction.

The slower pace was due to scarcity in staff, supply chain constraints due to rising raw material prices. Manufacturing firms also brought forward purchases in the month, further contributing to the slower growth levels.

About 72 per cent of manufacturers saw an increase in their average input costs, according to IHS Markit.  

Also Read: UK Manufacturing PMI Displays A Record Surge in May

Let us take a look at 3 FTSE 100 listed stocks in the industrial manufacturing sector and see how they reacted to this development:

1. Melrose Industries PLC (LON: MRO)

Melrose Industries is a UK based manufacturing firm focused on buying and selling underperforming companies.

The industrials manufacturing firm’s shares were among the highest risers on the FTSE 100 index in today’s trading session, taking support from the positive sentiment in the aerospace and defence sector after the aerospace component company Meggit PLC (LON: MGGT) soared on takeover news.

Melrose also hold interests in the aerospace and defence sector after buying out aerospace business GKN Aerospace in 2018.

Melrose Industries’ shares were trading at GBX 168.40, up by 5.18 per cent on 2 August at 12:22 PM GMT+1. Meanwhile, the FTSE 100 index was trading at 7,082.00, up by 0.71 per cent.

The company’s market cap was at £7,778.07 million and its one-year returns stood at 97.81 per cent as of 2 August 2021.

Also Read: 3 FTSE Stocks Go for Asset Disposal: Melrose, Studio Retail, ITM Power

2. Weir Group PLC (LON: WEIR)

Weir Group is a global manufacturer and provider of mill circuit and technology services. The company orders increased to £1,090 million from £934 million in H1 2020 due to a rise in demand for sustainable mining technology.

It also resumed paying out dividends in H1 2021, announcing an interim dividend of 11.5 pence per share due to an increase in momentum and strong orders.

Weir’s shares were trading at GBX 1,754.00, up by 1.51 per cent on 2 August at 14:09 PM GMT+1. The company’s market cap was at £ 4,486.10 million, and its one-year returns stood at 46.64 per cent on 2 August 2021.

3. Smiths Group PLC (LON: SMIN)

Smiths Group is a diversified engineering company involved in the manufacturing, design and sale of various products and services.  The group has been mulling a sale of its medical division to US private equity company TA Associates for a deal worth up to £2 billion, according to some media reports.

The group had earlier planned to spin off its medical arm in 2018 but had paused its plans during the onset of the pandemic.

Smiths’ shares were trading at GBX 1,562.50, up by 0.45 per cent on 2 August at 14:17 PM GMT+1. The company’s market cap was at £ 6,165.63 million, and its one-year returns stood at 15.28 per cent on 2 August 2021.