UK PMIs: Manufacturing activity creeps higher amid Covid restrictions
UK manufacturing activity climbed back to its highest levels since the latest lockdown began in February, new figures have shown.
The IHS Markit/CIPS Purchasing Managers’ Index rose to 55.1 last month, up from 54.1 in January. Any reading above 50 designates growth.
However, a combination of supply chain disruption as a result of the Uk’s departure from the EU and cost pressure due to material shortages kept a lid on output growth.
The reading came in above a flash estimate of 54.9.
New orders expanded following a slight decrease in January, as domestic demand improved
and new export business inched higher.
However, Rob Dobson, director at IHS Markit, warned that manufacturing constraints look set to remain for the months to come.
“The UK manufacturing sector was again hit by supplychain issues, COVID-19 restrictions, stalling exports, input shortages and rising cost pressures in February.
“Look past the headline PMI and the survey reveals near stagnant production, widespread shipping and port delays and confusion following the end of the Brexit transition period.
“With current constraints likely to continue for the foreseeable future, pressure on prices and output volumes may remain a feature during the coming months”, he said.
Eurozone manufacturing surge shows Brexit friction
In the Eurozone, manufacturing growth jumped to a three-year high of 57.9, up from 54.1 in January.
A surge in demand helped the measure to one of the highest levels in its history, though also resulted in a shortage of raw materials and a spike in input costs.
Richard Austin, head of manufacturing at accountants BDO, said that the contrast between the UK and EU’s performance was illustrative of the problems Brexit has caused for supply chains.
“While the rise in the UK’s manufacturing PMI is encouraging, sentiment is notably lower than in major Eurozone economies which have reported the fastest growth in manufacturing for three years”, he said.
“While the vaccine roll-out is faster in the UK than in mainland Europe, this would suggest that Brexit frictions are proving challenging.”
Austin added that manufacturers would be looking to Chancellor Rishi Sunak to provide incentives to the industry at this week’s budget.
“What manufacturers desperately need is a targeted tax policy which supports a green economic recovery through the adoption of new technology and digital transformation.
“Without the right investment conditions, the UK manufacturing sector risks falling behind international competitors.”