The UK manufacturing sector made a positive start to the second quarter of the year, with the trends in output, new orders and employment all showing signs of improvement.
Supply chain and price pressures continued to grow, however, as disruptions, delays and the war in the Middle East were felt across the sector.
The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) rose to a 47-month high of 53.7 in April, its best level since May 2022 and little-changed from the earlier flash estimate of 53.6.
The headline PMI has posted above its neutral 50.0 mark – signalling expansion – for six successive months.
Four of the five PMI sub-components (output, new orders, employment and suppliers' delivery times) were all at levels usually consistent with improved operating conditions. Stocks of purchases also declined to one of the weakest extents during its current 43-month sequence of contraction. Manufacturing production rose for the sixth time in the past seven months.
Rob Dobson, Director at S&P Global Market Intelligence “April saw the growth rate of the UK manufacturing sector recover after being hit by the impacts of the war in the Middle East during March.
“The headline PMI rose to a near four-year high, as the trends in output and new orders strengthened. Staffing levels were also increased for the first time in 18 months.
“The upturn comes with several of catches, however. Restrictions on transit through the Strait of Hormuz are causing substantial disruptions to input deliveries, with supplier lead times lengthening to the greatest extent in almost four years. The resulting material shortages are exerting steep pressure on purchasing costs. Input prices rose at one of the fastest rates in the 34-year survey history, and at a pace rarely exceeded outside of the pandemic-related inflationary surge of 2021-22.
"It should also be noted that the gain in production is partly the result of clients bringing forward purchases to mitigate expected price uplifts and supply disruptions. As this process unwinds later in the year, alongside declining business optimism, growth in the sector could cool while inflationary pressures remain on high heat.”
