Orders and output recover in UK manufacturing industry

UK manufacturing data 01102020
UK manufacturing data 01102020

The UK manufacturing sector is continuing its recovery from the pandemic as output and new orders increased, according to the latest industry data.

The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) fell slightly to 54.1 in September, down from August's two-and-a-half year high of 55.2. The PMI has remained above its no-change mark of 50.0 for four successive months, its longest sequence in expansion territory since early-2019.

Output increased for the fourth consecutive month in September, despite the rate of growth easing slightly. Higher production was linked to improved inflows of new work, companies reopening and staff returning to work.

Solid expansions were seen in the consumer, intermediate and investment goods sectors, with the steepest increase in intermediate goods. Large manufacturers saw the fastest growth and small-sized firms the slowest.

Underpinning the ongoing recovery in output volumes was a further increase in new order intakes. New business rose for the third successive month, reflecting a combination of improving customer demand, rising export orders, signs of recovery in the retail sector and the reopening of schools. That said, the rate of increase was slightly less marked than August's near three-year high.

The ongoing reopening of many economies around the world from lockdowns and changes to COVID-19 restrictions boosted the export performance of the UK manufacturing sector in September. New export business rose for the second successive month, with the rate of expansion accelerating to a 21-month high. The increase was linked to stronger demand from Europe, Asia and North America.

Commenting on the data, Fhaheen Khan, economist at Make UK, said: “Manufacturers are continuing to benefit from the easing of restrictions and the return of some staff from furlough. As expected an increase in orders from East Asia is the primary source of revenue for businesses whilst other key markets still remain at least partially closed. However, there is clearly a slowdown in the rate of expansion, indicating the quick recovery was a result of pent up demand which is now beginning to fade.

“As this demand peters out, with little sign of orders returning and job losses rising even before the job retention scheme expires this month, the uphill struggle for manufacturers starts now. We must forge a long-term plan for recovery starting with a revitalised Industrial Strategy that places manufacturing on the forefront and provides extra support to those key strategic industries that are still vulnerable.”

Survey data were collected 11-25 September

Markit Economic www.markiteconomics.com

Make UK www.makeuk.org

Company

Make UK

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