New data shows manufacturing output at highest levels in almost 30 years as recovery gathers pace

Wed 5 May 2021
Posted by: William Barns-Graham
Trade News


The UK’s recovery from the impact of the Covid-19 pandemic gathered pace in April as manufacturing production increased for the 11th consecutive month, hitting a 27-year high.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) scored a better-than-expected 60.9 for the month last month – its highest reading since 1994. Any score above 50 indicates growth.

A third straight month of increasing new orders, helped by stronger client confidence and the reopening of more parts of the economy, were behind the results.

Increasingly positive

“The outlook for the sector is increasingly positive, with two-thirds of manufacturers expecting output to be higher in one year’s time,” Rob Dobson, director at IHS Markit, told City AM.

However, he also noted that “export growth remains relatively subdued as small manufacturers struggle to export.”

Supply chains continue to be impacted by the introduction of new rules for trade with the EU following the end of the transition period on New Year’s Eve.

New orders

According to Manufacturing Global the results for manufacturing output and new orders were among the best seen over the past seven years, which in turn has led to a strong increase in employment.

At the start of the second quarter, 66% of companies forecast that output will be higher in a year’s time due to expectations of less disruption related to Covid-19 and Brexit.

They also reported that the national economic recovery, improved client confidence and new product launches were driving confidence.

Manufacturing surge

The report is in line with the CBI’s latest Industrial Trends survey which saw optimism among manufacturers surge in Q1 of this year.

Rain Newton-Smith, CBI chief economist, said: “Manufacturers have reported the biggest increase in optimism in nearly 50 years in this month’s quarterly survey. Phased reopening has lifted the mood among firms, notably driving orders, employment, and investment plans.”

Party like it’s 1997

Manufacturing optimism in the three months leading up to April improved at its quickest pace since April 1973, while hopes around investment also rebounded.

Firms expect to increase capital expenditure on buildings, plant & machinery, product & process innovation, and training & retraining in the next year.

Investment intentions for plant & machinery were at their strongest since July 1997.