Coronavirus pandemic takes its toll on UK manufacturing data

The coronavirus pandemic and subsequent mitigation efforts from industry have led to a substantial contraction in UK manufacturing production in March.

Output fell to the greatest extent since July 2012 following a similarly severe reduction in intakes of new business. The impact was also felt in the labour market and through supply chains.

Transport delays and shortages of raw materials led to the steepest increase in vendor lead times in the 28-year survey history, further disrupting production.

The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) fell to a three-month low of 47.8 in March, down from 51.7 in February.

The downturns in output and new orders were widespread, with contractions seen across the consumer, intermediate and investment goods sub-industries. Manufacturers reported that disruption resulting from the Covid-19 outbreak, lower market confidence and company shutdowns had all contributed to the drops in production and new business. Business sentiment was also affected, falling to a series-record low.

The latest decrease in total new order intakes reflected reduced demand from both domestic and overseas markets. New export business declined to the greatest extent since July 2012, as the outbreak of led to lower demand from across the global economy. There were also reports of project delays, cancellations and transportation issues.

Commenting on the data, Seamus Nevin, chief economist at Make UK, said: “Many firms have had to shut and lots of those that remain open have seen orders or output suffer. Others have switched to making products that are vital to the national attempt to stop the spread of the virus; a testament to why backing manufacturing is so important.

“At the start of this year manufacturing companies reported unprecedented optimism about investment and trade but that had all been swept away by current events. With estimates suggesting up to a fifth of smaller firms could go out of business in the next few months coronavirus has highlighted the need to maintain and develop our domestic manufacturing base. The chancellor has rightly intervened to help but even still costs are going up. A 6.2% increase in the national living wage came into effect this morning.

"With expectations of further restrictions and economic disruption to come business optimism is that a record low and may continue to worsen in the months ahead”


Make UK


Make UK [**]


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