May 8, 2021

Premium Newspaper

The Premium News Provider

Manufacturing in the UK grew at the fastest rate in 27 years last month


Manufacturing in the UK grew at the fastest rate in 27 years in the past month as the Covid movement made a startling recovery

  • PMI numbers show manufacturing sector growth at the fastest pace since 1994
  • The level for April confirms the strong recovery underway after the coronavirus hit
  • Anything over 50 in a closely watched index represents an expanding sector
  • The Bank of England is expected to raise its growth forecast for the UK this week

Manufacturing in the UK grew at the fastest rate in nearly 27 years in the past month as the pace of the coronavirus resurgence increased.

The closely watched IHS Markit / CIPS PMI reached 60.9 in April – with anything above 50 representing expansion.

This was higher than the 58.9 recorded in March, and the highest seen since a score of 61 in July 1994.

The positive results from the monthly survey come amid expectations that the Bank of England will raise its growth forecasts this week.

Chancellor Rishi Sunak insisted the UK was well positioned for a strong recovery, as consumers who stayed at their jobs during the pandemic were sitting on billions of pounds in imposed savings.

Manufacturing managers said they saw production growth due to easing restrictions, improving demand, and an increase in business backlog.

This means that the UK sector has seen growth for 11 months in a row.

The closely-watched IHS Markit / CIPS PMI reached 60.9 in April – with anything above 50 representing expansion.

Chancellor Rishi Sunak (pictured while visiting the Quorn Foods Factory in North Yorkshire last week) insisted the UK is well positioned for a strong recovery

Chancellor Rishi Sunak (pictured while visiting the Quorn Foods Factory in North Yorkshire last week) insisted the UK is well positioned for a strong recovery

FMCG manufacturers performed stronger as retailers, bars, restaurants and the entertainment sector increased orders after the reopening of parts of the economy.

Improved global conditions also contributed, with international orders growing as well, although this was weak compared to domestic business.

Larger manufacturers have benefited from international orders compared to smaller firms, indicating that post-Brexit ordering complexities are being resolved at the largest firms.

The outlook for the sector remains positive as two-thirds of the respondents believe that output will be higher within a year.

Only 4 per cent believe the sector will contract, leaving public confidence at its highest level in seven years.

The survey found that there are signs that inflation is also on the rise, with average selling prices rising at the fastest pace since records began in November 1999.

Supply chain delays and lack of inputs – some said that increased demand for supply also contributed to the price hike.

Rob Dobson, director of IHS Markit, who is compiling the survey, said: “ Further easing of Covid-19 restrictions at home and abroad has led to another remarkable growth spurt in UK factories.

The outlook for the sector is also increasingly positive, with two-thirds of manufacturers expecting production to be higher within one year.

But he warned that the sector was still suffering from supply chain problems and rising inflationary pressures.

The disruption that followed Brexit and Covid-19, especially at ports, has caused delivery times for suppliers to be almost standard length of time.

The resulting lack of inputs has kept producer price inflation among the highest for the past four years.

Manufacturers have generally passed these costs onto customers, as evidenced by the record hike in selling prices, but it is hoped that this inflationary background will subside once supply and demand returns to the line while easing the logistical delay related to Covid.

The positive results from the monthly survey come amid expectations that the Bank of England (photos of Governor Andrew Bailey) will raise its growth forecast this week.

The positive results from the monthly survey come amid expectations that the Bank of England (photos of Governor Andrew Bailey) will raise its growth forecast this week.

Ads