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UK manufacturers reported growing at a record pace in May, according to a closely watched survey that will add to reasons for economic optimism.
The poll of hundreds of purchasing managers indicated a rapid pick up in orders and employment. Surveys of manufacturers in Germany and France also pointed to strong growth as businesses ramped up production to meet rising demand.
The IHS Markit/CIPS Purchasing Managers Index rose from 60.9 in April to 65.4 in May, the highest in the survey's three-decade history. Any reading above 50 indicates growth.
Manufacturers reported a record increase in new business as domestic and overseas demand continued to revive.
Companies linked new order growth to rising business confidence, the further re-opening of the UK economy and reduced issues relating to Covid-19.
Economists consider the PMI surveys to be a good early indicator of future growth.
IHS warned that businesses are also reporting supply problems as they struggle to keep up with rising demand. Backlogs of work and delivery times to manufacturers both increased in May. To deal with the extra work, businesses reported taking on new staff at the fastest rate on record.
Businesses particularly highlighted shortages of electronics, plastics and metals, and there were also delays in transport. The problems have caused manufacturers to raise their prices.
IHS director Rob Dobson said: "The UK PMI surged to an unprecedented high in May, as record growth of new orders and employment supported one of the steepest increases in production volumes in the near 30-year survey history.
"Growth is being boosted by the unlocking of economies from Covid restrictions and ongoing vaccination programmes. This is being felt across the globe, as highlighted by a record rise in new export business during the latest survey month."
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “The ongoing boost in job numbers was an attempt to build capacity to meet this surge as backlogs increased steeply and delivery times grew to unsustainable levels, pulling back on further progress in fulfilling orders.
“The march of the makers has turned into a sprint as the blocks of lockdowns have been removed, but we haven’t seen this level of price inflation on materials for decades.”