Upturn in UK manufacturing sector sees further momentum

The upturn in the UK manufacturing industry gained further momentum at the end of the third quarter, the latest data shows.

March saw the fastest output growth since late-2020, as inflows of new business from both domestic and overseas markets strengthened. The sector has severe supply chain and logistic issues, however, leading to delivery delays from suppliers and disruption to production and distribution schedules.

The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) rose to a decade-high of 58.9 in March, its best outcome since February 2011. The PMI level was supported by improved growth of output, new orders and employment along with increased supplier lead times. A slower decrease in stocks of purchases also had a positive impact on the latest reading compared to one month ago.

Manufacturing output increased for the 10th successive month and at the quickest pace since last November. Solid and accelerated growth was signalled in both the intermediate and investment goods industries. Consumer goods production returned to expansion following back-to-back contractions.

Higher output was linked to improved new order intakes, the vaccine roll-out and preparations for the planned loosening of lockdown restrictions. New business rose at the second fastest pace for over three years, with growth registered at consumer, intermediate and investment goods producers alike.

Companies reported improved demand from domestic and overseas clients, rising business confidence and customers ordering early to guard against potential price rises and further supply-chain disruption.

New export business rose at the quickest pace in the year-so-far, amid reports of improved demand from Europe, Asia and the US.

Commenting on today’s data, Fhaheen Khan, senior economist at Make UK, said: “Industry continues to build momentum from the depths of recession reaching the highest figure for a decade. Much of this is due to an increase in domestic orders as businesses move through the gears due to expectations of a population eager to spend and increased confidence from the vaccine rollout.

“A strong domestic market only makes up half of the puzzle to the manufacturing sector’s success however. The other half lies abroad and the latest figures indicate export sales have also improved as businesses stockpile in an attempt to shield against price fluctuations, although shipping delays and doing business with the EU remains a concern."

Survey data was collected from 12-26 March.

Markit Economics www.markiteconomics.com

Make UK www.makeuk.org

Company

Make UK

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