UK factories expand but lose momentum amid second wave
The UK manufacturing continued its recovery in October as output and new orders climbed, but the rate of expansion slowed as the economy headed into a tough winter, a survey has shown.
The IHS Markit/Cips manufacturing purchasing managers’ index (PMI) – a gauge of the sector’s health – slipped to 53.7 in October from 54.1 in September.
A score of above 50 indicates growth. October therefore marked the fifth straight expansion in the factory sector, but the drop in the PMI showed that the rebound was losing steam.
And while the manufacturing sector continued to expand, the services sector weakened severely in October amid rising coronavirus cases and new restrictions, an IHS Markit survey showed last week.
Data firm IHS Markit said manufacturing output eased to a four-month low in October. But it nonetheless grew at an above average rate.
The survey showed factories had seen an increase in new work and caught up on orders delayed during lockdown.
Exports were a particular bright spot, reflecting higher demand from both China and the US.
Consumer goods sector shrinks amid lockdowns
However, the survey showed that the consumer goods sub-sector fell into contraction in October. Companies said this was due to new coronavirus restrictions and rising cases.
Firms also laid off workers at a rapid rate, with the biggest jobs cuts at consumer goods firms. Companies said they were adjusting to the realities of the coronavirus pandemic.
“October saw the UK manufacturing recovery continue, albeit with the upturn losing momentum,” said Rob Dobson, director at IHS Markit.
“The main drag was a fall back into contraction for the consumer goods industry, blamed in part on lockdowns and falling demand as virus worries intensified among households.”
Duncan Brock, group director at Cips, the Chartered Institute of Procurement & Supply, said there was likely to be a “fretful end to the year”.
“As shoppers continue to press pause on spending, firms will be unable to conjure up the business they need to maintain operations.”