UK manufacturing faces ‘reality check’

Paul Snell is managing editor at Supply Management
1 April 2016

Growth in the UK manufacturing sector improved only marginally in March, continuing the sector’s sluggish performance at the start of 2016.

The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI), where a figure above 50 indicates expansion, recorded a figure of 51 in March. This was a slight improvement on February’s 34-month low of 50.8.

Output growth was unchanged from February’s levels, with softer economic conditions blamed for fewer orders from the US and mainland Europe.

Job cuts also increased for the third consecutive month, with the majority of losses in the investment goods sector, which suffered the worst in terms of fewer export orders in the past month.

Input prices also fell for the 19th month in a row, which also led to a slight decrease in selling prices.

David Noble, group CEO, CIPS, said: “This month’s disappointing figures will serve as a reality check on the performance of the manufacturing sector.

“Though the overall index showed a rise, the marginal increase will fuel concerns around strong supply chain continuity and any further impacts from major economic challenges such as the results of the Brexit vote.”

Markit senior economist Rob Dobson added: “Although March saw modest improvements in the trends for production and new orders, industry is still hovering close to the stagnation mark and will struggle to make a meaningful contribution to the next set of GDP growth figures.”

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