UK manufacturers saw a solid improvement in operating conditions as output growth hit a 32-month high in July, according to the latest PMI.
The improvement was backed by the sharpest rise in new order volumes since the end of 2018, while business sentiment also reached its highest level in 28 months.
The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index rose to a 16-month high of 53.3 in July, up from 50.1 in June and above the crucial 50 no-change mark for two months running.
Manufacturers were quick to ascribe the expansion in growth to a loosening of coronavirus lockdown measures that allowed them to restart or raise production in response to client businesses reopening.
However the PMI was accompanied by warnings that while this raised hopes of a recovery, it would take several months of growth to fully recoup the output lost since the start of the pandemic.
The consumer and intermediate goods industries saw especially marked growth, while investment goods production rose for the first time in 15 months.
Strengthening of domestic demand was largely considered responsible for new orders expanding for the first time since February.
New export business continue to fall for the ninth month in succession, although the most recent fall was the weakest in four months.
Lockdown restrictions constrained overseas demands but there were reports of inflows of new orders starting to pick up in several markets, including some parts of Europe, the US and Asia.
Expectations of strengthening client confidence boosted sentiment among manufacturers during July and confidence rose to its highest since March 2018.
Duncan Brock, group director at CIPS, said: “Driven largely by demand from the domestic market, clients looked towards building more localised supplier bases as opportunities for trade were unblocked with the end of the UK’s lockdown.
“However, overseas customers failed to deliver any positive news. With a ravaged economic landscape it will be a slow train to recovery, managing the ebbs of flow of potential disruptions to come.”
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