Manufacturing output grows to 32-month high
11 August 2020
UK manufacturing continued on its road to recovery in July with month-on-month output expanding at its fastest level for nearly three years, showing signs of growing confidence in the sector.
UK manufacturing continued on its road to recovery in July with month-on-month output expanding at its fastest level for nearly three years, showing signs of growing confidence in the sector.
The UK Manufacturing Purchasing Managers’ Index (PMI) for July continued on an upward trajectory from June, when the sector returned to tentative growth for the first time since the outbreak of COVID-19.
The rate of growth in output hit a 32-month high, with manufacturers linking the expansion to the loosening of lockdown conditions. This allowed companies to restart or raise production in response to clients reopening.
Manufacturing production also rose for the second successive month and new orders expanded for the first time since February. Growth was particularly evident in the consumer and intermediate goods industries, although investment goods production also rose for the first time in 15 months.
The positive shift in the sector has mainly driven by an increase in domestic demand, with new export orders still falling month-on-month - although there are signs that export business is starting to stabilise as other countries recover from COVID-19.
The uplift translated into improved confidence in the sector, with 62 per cent of manufacturers surveyed expected production to be higher one year from now - the highest level for more than two years.
Commenting on the PMI data, James Brougham, Economist at Make UK, said:
“UK manufacturers have been eager to embark on the road to recovery, and those efforts would appear to be bearing fruit with improved orders allowing industry a greater degree of confidence it needs to drive output up.
“Nevertheless, industry has been through a profound shock, the impact of which will continue to be felt for some time to come, especially in those sectors which have been most heavily affected. While the data from one month gives some cause for optimism we are going to need consecutive months of positive performance to recoup the deep losses incurred by the pandemic, a prospect that is threatened by the continued loss in jobs which we are likely to see coming through the pipeline.”