UK PMI: Manufacturing output jumps but coronavirus looms
Britain’s manufacturing sector grew at its fastest rate in ten months in February, UK PMI survey data has shown, although coronavirus has begun disrupting the industry.
The IHS Markit/Cips manufacturing purchasing managers (PMI) index hit 51.7 in February, up from 50 in January, with a score above the 50 mark indicating expansion. The reading was slightly lower than an earlier estimate of 51.9, however.
Reduced political uncertainty following Prime Minister Boris Johnson’s landslide election win and Britain’s exit from the EU helped domestic demand recover.
The main factor driving up output growth was a jump in new orders. Business optimism also rose to a nine-month high.
However, data firm IHS Markit warned that the coronavirus outbreak led to “sizeable raw material delivery delays, rising input costs and increased pressure on stocks of purchases” in February.
Coronavirus, which broke out in China in December and has spread to more than 50 countries around the world, has shaken global markets. Investors fear containment efforts will damage the global economy by hitting supply chains and denting demand.
The outbreak is the latest cloud of over the head of manufacturers, who last year had to deal with the US-China trade war, slowing global growth, and the Brexit impasse.
Duncan Brock, group director at Cips, the Chartered Institute of Procurement & Supply, said there had been “a startling deterioration in the performance of global supply chains” in February.
“With no clear end to the disruption in sight, the gains made by the manufacturing at the beginning of the year could soon be lost.”
Rob Dobson, director at IHS Markit, said: “The expansion of output was nonetheless the fastest since April 2019, as stronger demand from the domestic market led to the steepest increase in new work in 11 months.”
Yet Dobson said the boost in confidence was not yet sufficiently widespread to “support a sustained rise in capital spending”.
The survey showed that the confidence upturn remains confined to the consumer and intermediate goods sectors, with the downturn at investment goods producers continuing.
The investment goods sector also suffered job losses in February, sending overall manufacturing employment falling for the tenth time during the past 11 months.