UK manufacturing downturn eased in May from survey-record low in April

June 1, 2020 @ 11:11 by Richard Dawson

The latest survey of UK purchasing managers in the manufacturing industry points to another month of contraction in May, but activity has picked up since April.

The downturn was felt right across the sector as output, new orders and employment fell at near record rates, though less sharply than in April.

Rising from a record low of 32.6 in April, the UK Manufacturing PMI from IHS Markit recorded a score of 40.7 in May.

Anything under 50.0 signals a contraction and indeed the index was at its seventh lowest level ever last month.

Pockets of growth in the month were generally linked to healthcare-related or PPE products.

Some firms also noted that inflows of new business showed signs of restarting as clients began the process of reopening and the lockdown restrictions implemented both in the UK and overseas are gradually easing.

The May 2020 survey data were collected between May 12 and 26.

Overall business sentiment remained downbeat by historical standards as uncertainty about the path ahead weighed on confidence.

However, companies do expect to see output rise in the next 12 months and forecast that market conditions will recover some lost ground as lockdowns ease and clients reopen.

Rob Dobson, director at IHS Markit, which compiles the survey, said: “Those who typically see the glass half empty will note that the UK manufacturing sector remained mired in its deepest downturn in recent memory.

“Output, new orders and employment fell sharply again in May as restrictions to combat the spread of COVID-19 caused further widespread disruptions to economic activity, demand and global supply chains.

“However, the glass-half-full perspective is one where the rate of contraction has eased considerably since April, meaning – absent a resurgence of infections – the worst of the production downturn may be behind us.

“Pressure on manufacturers should ease further as lockdown restrictions are loosened, customers return to work and global activity restarts.

“However, changes to working practices, uncertainty about how long the COVID-19 restrictions may be in place for, weak demand and Brexit worries all suggest the UK is set for a drawn-out economic recovery.

“This will make the ‘new normal’ one of the toughest recovery environments many manufacturers will ever have to face.”

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