Manufacturing PMI rises for first time in 7 months
15 March 2023
The UK manufacturing sector showed the first early signs of recovery in February as a downturn in output halted, improved supply chains boosted production and inflationary pressures eased slightly.
According to the S&P Global / CIPS UK Manufacturing Purchasing Managers’ Index (PMI), which tracks economic trends in the manufacturing sector, production in February rose for the first time in 8 months.
Although the overall level of new work received by manufacturers decreased for the ninth successive month, the rate of contraction in February was only mild, showing signs that customer demand is stabilising.
A revival in global economic conditions and reopening of China from COVID-19 restrictions had a positive impact on overseas demand, while lead times in supply chains shortened for the first time since June 2019.
As a result, business sentiment improved to its highest level in a year, with almost 60 per cent of surveyed companies forecasting that their production would be higher in 12 months’ time, compared to only 10 per cent anticipating a downturn.
Overall, the PMI posted a score of 49.3 in February – just below the all-important neutral mark of 50, which indicates the point at which the industry returns to a state of growth rather than contraction.
Commenting on the figures, Andy Hart, Manufacturing and Industrials Relationship Director at Lloyds Bank, said:
“Manufacturers are currently facing a twin reality. With bullish order books suggesting that supply chain challenges have past their peak, business to business trade is strong. However, a persistently tight labour market and prolonged cost pressures may hold back the sector from returning to growth.
“There has been less confidence when it comes to demand for consumer goods over recent months, but a return to growth here is encouraging to see. Household budgets are impacting discretionary spending, and while inflation is easing from its peak, consumers are still feeling the pinch from prices increasing faster than wages. Consumer spending pressures will continue to curb demand for the next few months at least.”
For fully funded advice on navigating your manufacturing business through today’s economic challenges and opportunities, contact our friendly Manufacturing Team today.