Manufacturing growth soars to 10-year high as businesses prepare to reopen

The UK’s manufacturing sector grew faster in March than in any month for more than a decade, according to new data.

The closely-followed IHS Markit/CIPS Purchasing Managers’ Index (PMI) recorded a score of 58.9 – anything above 50 is seen as a sector in growth – with business optimism hitting a seven-year high.

Bosses in manufacturing reported strong growth in new business from domestic and overseas customers as the vaccine rollout continues at pace and the Government’s road map to reopening saw an increase in trade.

But the survey found strong growth is putting a strain on supply chains, with logistics issues leading to delivery delays.

Overall manufacturing output also increased for the 10th successive month, and at the quickest pace since last November, including consumer goods production, which had shrunk during the previous two months.

Bosses reported an increase in orders as non-essential retailers and the hospitality sector gear up to welcome back customers as lockdown restrictions ease.

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Some also saw an increase in orders from customers keen to buy stock now to avoid disappointment due to future supply-chain disruption or potentially higher costs.

But supply-chain issues have already arrived, respondents said, with Covid-19 restrictions, low stocks at suppliers, port disruption, post-Brexit issues and raw material shortages all cited.

Inflationary issues are also starting to hit the sector – with the extra costs being passed on to customers – as output charges rose at the quickest pace since January 2017.

All the extra business did help boost employment in the sector, with jobs growth hitting a seven-year high, supported by the sharpest rise in backlogs of work for 11 years.

Rob Dobson, director at IHS Markit, which compiles the survey, said: “The domestic market remained the prime source of new orders, as companies reported that the vaccine rollout and clients’ preparations for the loosening of lockdown restrictions underpinned the expansion.

He added: “Weak export sales and supply-chain issues are likely to remain constraints on growth moving forward, however, with shipping issues already leading to severe disruption to production schedules, raw material availability and the onward distribution of finished products to clients, especially abroad.”

Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS), said: “All in all, a great end to the first quarter where some businesses recovered losses from last year, but the reality of continued supply chain disruption as a result of Covid, Brexit and now the Suez delays could potentially rein back some of the gains in April.”

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