New data for UK manufacturing shows that output is growing at its fastest rate in 30 years with manufacturers struggling to keep up with demand.
The authoritative monthly PMI Index (the IHS Markit/CIPS Manufacturing Purchasing Managers’ Index) reached a high in May of 65.6, up from 60.9 in April.
Any score above 50 represents growth.
Service sector grows too
Released today (3 June), the IHS Markit / CIPS UK Services PMI report highlighted that the reopening of the UK’s economy from lockdown has also fuelled the UK’s service sector – which has, in fact, experienced the fastest monthly growth of services since 1997.
The survey defines services as including hospitality, banking and IT.
IHS director Rob Dobson said manufacturing growth is being boosted by the unlocking of economies from Covid restrictions and ongoing vaccination programmes.
However, delivery times are increasing as manufacturers can’t keep up with soaring demand, the survey revealed. Shortages of raw materials and delays in transport are also troubling businesses, the report says.
The Times also reports that manufacturing’s recovery is “remarkably strong” and that business confidence is “glowing red hot”.
Business confidence rose to its highest level since records began in July 2012. More than 70% of companies forecast that production would be higher in one year’s time, compared with 3% expecting a decline.
The business boom has led to warnings about rising inflation which could force the Bank of England to raise interest rates, according to Thisismoney.
Duncan Brock, at the Chartered Institute of Procurement & Supply, said: “We may not have seen the price peak yet. This means bigger inflationary pressures for the wider economy and the country’s place in international trade as prices charged rose at record rates.”
The figures confirm a more positive picture for UK manufacturing that was revealed in a recent CBI survey. The business organisation’s monthly industrial trends report found output grew at the fastest rate since December 2018 – the first material growth reported in almost two years.
Total order books also improved to their strongest since December 2017 and were reported to be “above normal” for the first time since February 2019.
Export order books were broadly unchanged from April, but this nonetheless represented the strongest outturn since February 2020.