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Index confirms expected drop in UK manufacturing

April’s Purchasing Managers’ Index (PMI) for UK manufacturing shows the sector has contracted at the fastest rate in 28 years, but overall positivity about the future remains.

All factors measured in the PMI have reached the furthest extremes since records began - including supplier lead times, which have continued to lengthen on average despite a record reduction in purchasing activity.

Longer lead times are usually a positive sign of sector growth, but in this case are the result of logistical issues and lockdowns across the globe.

Almost no industry has remained untouched by the pandemic, with contractions felt across the consumer, intermediate and investment goods sub-sectors, though the latter seems most affected. UK car production, for example, was nearly two-fifths lower in March than the same time last year. 

In slightly more positive news, price inflationary pressures remained “mild” in April and input costs rose only marginally, although this was largely down to low oil prices and some suppliers lowering prices in the face of weak demand. 

Nevertheless, companies still forecast on average that output will be higher one year from now - matching recent predictions of a global manufacturing recovery by early 2021.  

Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply (CIPS), which co-produces the PMI, commented:

“There is no comparable time in history to make predictions against but as production ramps up again in the Far East, the sector remained optimistic that in a year’s time the operating environment will resemble some new normality.”

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