April 2, 2021 @ 14:00 by Richard Dawson
The UK manufacturing sector is growing at the fastest pace in a decade as inflows of new business from both domestic and overseas markets strengthened.
IHS Markit’s UK Manufacturing PMI rose to 58.9 in March, which is the highest reading since February 2011.
This was supported by improved growth of output, new orders and employment along with increased supplier lead times.
The March reading marked the tenth successive month of manufacturing output growth.
Solid and accelerated growth was signalled in both the intermediate and investment goods industries while consumer goods production returned to expansion following back-to-back contractions.
The vaccine roll-out and preparations for the planned loosening of lockdown restrictions were cited as major factors in the higher output reading as well as improved demand from domestic and overseas clients.
These things also underpinned increased optimism and job creation in UK factories.
Business sentiment was at its most elevated for seven years, hitting unsurpassed levels at both consumer and investment goods producers.
Almost two-thirds of manufacturers expect output to rise over the coming year (only 6 per cent expect a contraction).
Jobs growth was also at a seven-year high, supported by the sharpest rise in backlogs of work for 11 years.
Rob Dobson, director at IHS Markit, said: “Signs of Spring have appeared in the UK manufacturing sector, with the PMI hitting its highest level in a decade. Growth of output, order books and employment all gathered momentum and optimism about the year ahead improved further.
“Weak export sales and supply-chain issues are likely to remain constraints on growth moving forward, however, with shipping issues already leading to severe disruption to production schedules, raw material availability and the onward distribution of finished products to clients, especially abroad.
“The extent to which supply chains have worsened through much of the past year has been unsurpassed during the near three-decade survey history.
“Demand outstripping supply to such a wide extent is meanwhile driving up prices, with rates of inflation in input costs and selling prices both accelerating to near record highs.
“The longer these inflationary and supply chain worries persist, the greater the potential to curb the strength of the upturn as the economy unlocks in the coming weeks and months.”