Manufacturing boost for UK but sector warns of slowdown from coronavirus

2 March 2020, 10:04

A car manufacturing plant
Nissan Infiniti launch. Picture: PA

The latest Manufacturing PMIs for February hit 51.7 – a nine-month high.

Growth in manufacturing in the UK jumped last month as improvements since the general election continue to take hold, according to new data.

The closely followed HIS Markit / CIPS Purchasing Managers’ Index (PMI) came in at 51.7 for February – anything above 50 is seen as a sector in positive territory – improving on the 50.0 recorded in January.

Growth in the sector was faster than at any point since April 2019 with both consumer and intermediate goods businesses strengthening.

Managers said the rise was due to new work orders increasing and confidence improving with “planned new investment, product launches, improved market conditions and a more settled political outlook”.

However, the numbers do not take into account the economic slowdown felt from the coronavirus outbreak, with the full impact not yet felt.

Rob Dobson, director at IHS Markit, which compiles the survey, said: “The UK manufacturing sector remained in recovery mode in February, as reduced levels of political uncertainty following last year’s general election translated into further growth of output and new orders.

“Supply-chain disruptions were emerging rapidly, however, as the Covid-19 outbreak led to a substantial lengthening of supplier lead times, raw material shortages, reduced inventories of inputs, rising input costs and reduced export orders from Asia and China in particular.

“With supply-chain headwinds rising, and trade negotiations with the EU starting, it remains to be seen whether the recovery can stay on course during the coming months.”

The recent storms and flooding in the UK has also had an impact, with increased pressures on stock, as companies burned through Brexit safety stock.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, added: “Optimism rode high, as domestic clients set aside major fears about the economy, Brexit and political uncertainty to get production moving again.

He added: “With no clear end to the disruption in sight, the gains made by the manufacturing at the beginning of the year could soon be lost.

“A vortex of poor UK weather conditions, underlying remaining Brexit fears and now the coronavirus will strip the sector of any significant wins if supply chains continue to disintegrate in the coming months.”

By Press Association

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