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UK factory orders jump in March as end of lockdown nears - PMI

·2-min read

LONDON (Reuters) - British factories rode a wave of orders in March and prepared for a gradual reopening of the economy from its COVID-19 shutdowns by hiring staff at the fastest rate since 2014, a survey showed on Thursday. 

  The IHS Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) rose to 58.9, revised up from a preliminary 57.9 and marking the highest reading in just over 10 years. 

  Britain's swift roll-out of COVID-19 vaccines is expected to lead to a recovery in the economy this year after it slumped by nearly 10% in 2020 - its deepest contraction in about 300 years. 

  The PMI survey showed new orders rising at the second-fastest pace for more than three years as companies geared up for a lifting of restrictions, which will see non-essential shops and outdoor hospitality reopen on April 12. 

  Still, the reading was flattered by one of the sharpest increases in supply chain delays on record - adding more than four points to the PMI versus a month without delays. 

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  While delays are a sign of strong demand in normal times, IHS Markit said a combination of lockdown restrictions, global shipping disruptions and red tape caused by Brexit contributed to a sharp lengthening in supplier delivery times. 

  Optimism hit a seven-year high, chiming with other surveys published earlier on Thursday, and output of consumer goods rose after suffering back-to-back falls. 

  Exports remained weak but still rose thanks to improved demand in Europe, Asia and the United States. 

  In a sign of some inflation pressures building, the pace of input price growth hit a 50-month high and the prices charged by factories rose at the quickest pace since January 2017. 

  "The longer these inflationary and supply-chain worries persist, the greater the potential to curb the strength of the upturn as the economy unlocks in the coming weeks and months," Rob Dobson, director at IHS Markit, said. 

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  (Reporting by Andy Bruce and William Schomberg; Editing by Hugh Lawson)