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Flash surveys reveal rapid u-turn in manufacturer confidence

Food and chemicals producers recorded new output growth in March, but the rest of the manufacturing sector has been hit hard by falling demand and delayed deliveries.

A flash UK Manufacturing Purchasing Managers’ Index (PMI) for March shows that the Coronavirus pandemic has already had a significant impact on the manufacturing sector, despite positive early signs of growth at the start of the year.

Measured overall, manufacturing output dropped at the sharpest month-on-month pace since July 2012. Supplier delivery times reached their longest since the index began in 1992 - usually a positive sign of rising demand, but in this case a consequence of temporary shutdowns in factories across the world.

As expected, the situation has translated into growth for both the food and drink supply chain and the chemicals & plastics sectors - the former due to stockpiling by consumers, the latter due to a surge in pharmaceuticals production. However, growth in these areas was more than offset by declines elsewhere.

In a separate survey of 288 manufacturers by the Confederation of British Industry (CBI), output expectations dropped to their weakest level since the financial crisis, despite confidence rising at the fastest pace since 2014 in the last quarter. Nearly half of the manufacturers (44 per cent) told the CBI their order books were below normal.

Anna Leach, Deputy Chief Economist at the CBI, commented:

“The manufacturing sector is facing unprecedented challenges due to COVID-19, such as widespread disruption to supply chains and weakening demand due to domestic containment measures. With expectations for output set to fall in the coming months, it’s now more important than ever manufacturers get the support they need."

GC Business Growth Hub is working hard to provide manufacturers with the support they need to continue operating in the coming months. For more information and advice on issues relating to the Coronavirus pandemic, visit our dedicated resource hub.

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