UK manufacturing update: Coronavirus overshadows output boost

Image: XYZ Machine Tools
Image: XYZ Machine Tools

The UK manufacturing industry's output accelerated to a 10 month high in February as Brexit uncertainty diminishes and domestic demand recovers.

This is according to the seasonally-adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI). Read last month's PMI index report here.

Supply chain disruptions were rapidly emerging, however, as the outbreak of Coronavirus (COVID-19) led to sizeable raw material delivery delays, rising input costs and increased pressure on stocks of purchases.

The index rose to 51.7 in February, up from 50.0 in January, but below the earlier flash estimate of 51.9. The PMI posted above the 50.0 neutral mark for the first time in 10 months.

Related: Early signs of a turnaround in UK manufacturing, CBI survey shows

Manufacturing output increased at the fastest pace since April 2019, as growth strengthened in both the consumer and intermediate goods sectors. In contrast, the downturn at investment goods producers continued. The main factor underlying output growth was improved intakes of new work.

Business optimism also strengthened, hitting a nine month high, reflecting planned new investment, product launches, improved market conditions and a more settled political outlook.

February saw the level of new work received expand for the second successive month. The rate of increase accelerated to an 11-month high as reduced levels of political uncertainty and successful promotional activities aided a further recovery in domestic market strength.

Less positive news was provided by the trend in new export business, with overseas demand decreasing for the fourth successive month in February.

Impact of Coronavirus on UK manufacturing

Companies reported reduced new work intakes from Asia (especially China) due to the COVID-19 outbreak.

The virus outbreak had a noticeable impact on supply chains during February. Average vendor lead times lengthened to the greatest extent since July 2018, while the eight-point drop in the level of the seasonally adjusted Suppliers' Delivery Times Index was the largest in the 28-year survey history.

Commenting on today’s data, Seamus Nevin, chief economist at Make UK, said: “Manufacturing emerged from its longest decline since the 2008 Financial Crisis in January, and the reduced levels of political and global trade uncertainty are continuing to bring improvements in manufacturing performance and confidence as we get further into the new year.

“Domestic performance is rebounding. However, there are emerging signs that the coronavirus is impacting on industry while the downward trend in new export orders is a growing concern. Coming as it does on the day the UK kick-starts our future trade negotiations with the EU and US, all eyes will be on the nature and quality of any trade deals secured over the next eleven months.”

Markit Economics

Make UK


Make UK

Related Articles

FEATURE: Airlines may hope to dodge Brexit risks under Norway

If UK voters opt to leave the EU, the Government — supported by the likes of British Airways and EasyJet — would likely seek to retain access to Europe’s single aviation market. But rolling over those provisions may not be straightforward, and some predict hikes in fares of up to 30%.
7 years ago Features

Apprentices call for change

Britain’s young apprentices have called upon the new Government to put skills and qualifications at the very top of the agenda in Brexit Britain – and have created a ‘five point plan’ to help them achieve that objective.
7 years ago News
Most recent Articles

Login / Sign up