UK manufacturing growth at three-year high - suppliers struggle to keep pace with demand from British manufacturers
Activity in the UK's manufacturing sector grew at its fastest pace for three years in April, according to Markit/CIPS UK Manufacturing PMI - Purchasing Managers Index. The index rose to 57.3 from 54.2 in March, with output, new orders and stocks of purchases expanding at faster rates than expected. Export growth was strong too. Although there were signs of a recent easing in input costs the sharp rises seen of late were being passed on in higher prices.
Here are some extracts from the press release:
'The exchange rate also continued to have an impact on cost pressures. The rate of purchase price inflation remained elevated and above the long run survey average, despite easing to a nine-month low. It is worth also noting that the pace of increase was down sharply from January’s record high. Manufacturers continued to pass on higher costs to clients, leading to a further increase in average output charges. Companies mentioned paying higher prices for a wide range of materials, including chemicals, metals and plastics. Part of the increase in purchasing costs reflected supply - chain pressures, as highlighted a marked lengthening in average.’
“The UK manufacturing PMI sprung back to a three year high in April after a brief blip in March. Spring has ushered in green shoots of growth with April marking the ninth consecutive increase in manufacturing employment. The calling of a snap election has failed to dampen the spirits of industry with output growing at the fastest rate in three months. “While the major political parties debate how best to leave Europe, British manufacturers have continued to increase their exports to the continent. A weaker pound has kept British products competitive on the world stage and encouraged the twelfth successive rise in manufacturing exports'
“The British manufacturing industry is moving at such a pace that suppliers are struggling to keep up with demand. Delivery times for raw materials have increased for the twelfth successive month and there are signs of shortages for both metals and plastics. With input costs rocketing upwards, some manufacturers are beginning to stockpile raw materials to protect against future price rises. So long as sterling’s buying power remains weak, however, consumers should prepare themselves for higher prices.”
The survey was conducted after the release last week of Official GDP figures from the Office for National Statistics indicating that the UK economy grew by just 0.3% in the first three months of the year, the slowest rate since the first quarter of 2016. Was that a blip – we shall see!
The Markit/CIPS UK Manufacturing PMI survey also follows the GfK’s Consumer Confidence Index. Although the index remains in negative territory it was reported that “In the face of widespread reports of rampant inflation, stagnating wages and anxiety over our borrowing binge, UK consumer confidence is surprisingly stable’. There was no evidence yet of the predicted post Brexit vote downturn.