World News

UK manufacturing returns to growth for the first time in 20 months

The UK manufacturing sector is back on track and showing “second signs of recovery”, according to a closely watched survey.

According to S&P Global/CIPS UK, both production and new orders rose in March, while business optimism also hit an 11-month high.

The corporate manufacturing purchasing managers’ index (PMI) rose to a better-than-expected reading of 50.3 last month from 47.5 in February.

Any value above 50 means growth. In March, the threshold was reached for the first time since July 2022 – 20 months ago – and follows growing concern about the sector.

The survey also found other signs of stabilization, with contraction rates in employment and purchasing activity “slowing sharply.”

Current money:
650,000 pensioners have to reckon with income tax for the first time

S&P director Rob Dobson said: “At the end of the first quarter, UK manufacturing recovered from its recent slump.”

“Output and new orders returned to growth after years of downturns, albeit haltingly, with the main impetus for expansion coming from stronger domestic demand.”

“The increase in demand also led to increased confidence among manufacturers, with positive sentiment reaching an 11-month high. About 58% of companies expect their production to increase in the coming year.”

But he warned that weak export performance and supply chain strains will remain – even as the impact of both factors fades.

Read more from business:
Inflation in shop prices “almost halved”

US giant AutoNation has set its sights on Inchcape UK
F1 owner Liberty to take over MotoGP for £3.5bn

Accenture UK’s Maddie Walker said: “It’s been a long winter for UK manufacturing, but the first net increase in production levels marks the end of years of decline.”

“This turnaround is driven by the fastest increase in new orders since May 2022 and improved operating conditions.”

“While this may encourage some to be optimistic, manufacturers should remain cautious. Despite this tentative return to growth and a rise in industry confidence, the issue of renewed inflation remains a major concern in the industry – with the recent increase in purchasing prices being the strongest in a year.”

While there were positive signs at home, demand abroad fell for the 26th consecutive month, the survey showed.

Cara Haffey, manufacturing and automotive leader at PwC UK, said the contrast could be a sign of “relative stability” domestically as inflation falls, compared with the ongoing supply chain disruption manufacturers face with global suppliers.

She added: “If domestic growth remains strong in comparison, it will be interesting to see whether we see a trend towards relocating supply chains and operations as part of manufacturers’ efforts to protect themselves from logistical disruptions.”

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also
Back to top button