UK manufacturing sector is growing at highest rate since 1994

The chancellor Rishi Sunak visits Blackrow Group, a metal fabrication business in Grimsby
The chancellor Rishi Sunak visits Blackrow Group, a metal fabrication business in Grimsby

The UK manufacturing industry saw more acceleration in the rate of expansion in April, according to the latest PMI data.

Growth of output and new orders were both among the best seen over the past seven years, leading to a solid increase in employment.

The sector remained beset by supply-chain delays and input shortages, however, which contributed to increased purchasing costs and record selling price inflation.

The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) rose to 60.9 in April, up from 58.9 in March and above the earlier flash estimate of 60.7. The latest reading is the highest since July 1994's record high (61.0).

Manufacturing production increased for the 11th successive month in April. Output growth was attributed to a loosening of lockdown restrictions, improved demand and rising backlogs of work.

Underpinning the latest robust expansion of production was a similarly marked improvement in intakes of new business. Total new orders rose for the third straight month, largely due to a further revival of domestic market conditions. Stronger client confidence, the re-opening of parts of the economy and improving global market conditions all contributed to sales growth.

Although new export business also rose in April, the growth rate was weak in comparison to that registered for total new orders. Companies reported improved new work intakes from several trading partners, including mainland Europe, the US, China and South-East Asia. Large-sized manufacturers saw a substantial expansion in new export order intakes, compared to only a marginal rise at small-sized firms.

The outlook for the UK manufacturing sector also remained positive at the start of the second quarter. 66% of companies forecast that output will be higher in a year's time. The overall degree of confidence currently stands at its highest level in seven years.

This optimism reflected expectations for less disruption related to COVID-19 and Brexit, economic recovery, improved client confidence and planned new product launches.

James Brougham, senior economist at Make UK, commented: “Today’s PMI figure is the highest for nearly 27 years, showing an industry that is outpacing its growth projections from just three months ago. Since the start of the year, output has consistently surpassed expectations, now coming to a head with today’s record breaking figure.

“While this marked positivity is welcome news for the UK economy, and certainly reflective of the abundance of activity seen throughout the manufacturing sector since the start of the year, we must remind ourselves that these figures being reported today come in response to the severity of the decline experienced in the same sector in the last year.

“Very high growth figures were always expected in the sector this year following 2020’s decline, but the early arrival of this growth will certainly serve to improve confidence in the UK manufacturing industry’s recovery from the pandemic, despite growing challenges around the supply-chain and soaring input prices. The sustainability of these meteoric growth levels will be challenged by supply-side disruption in the coming months.”

Markit Economics

Make UK


Make UK

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