Friday 1 May 2020 10:14 am

Coronavirus: UK manufacturing sector books record drops in 'ruinous' April

UK manufacturing sector activity plunged at a record pace in April during lockdown, a closely followed measure of industrial output showed today.

Factories saw output slump to 32.6 in April, according to IHS Markit’s Purchasing Managers’ Index (PMI) data. Anything below 50 represents a contraction.

Read more: Eurozone output and employment suffer record falls in April

Output, new orders and employment all plummeted at the fastest rates IHS Markit has recorded for the UK in 28 years of surveys.

IHS Markit called the data “ruinous” for UK manufacturers as they felt the full force of the coronavirus lockdown.

Rob Dobson, director at IHS Markit, said: “UK manufacturing suffered its worst month in
recent history in April, as output, orders books and employment all fell at rates far surpassing anything seen in the PMI survey’s 28-year history.

“Huge swathes of industry were hit hard by company closures, weak global demand, lockdowns and social distancing measures in response to Covid-19. The only pockets of growth were seen at firms making medical and food products.”

UK manufacturing firms blamed the coronavirus lockdown for their steepest falls on record. Company closures, weak demand in the UK and overseas, and widespread furloughing of staff all hurt them.

Read more: Coronavirus: March sees UK manufacturing sector suffer worst slump since 2012

The only rises were recorded by manufacturing companies producing food products and medical supplies.

Dobson added: “The outstanding question remains how long the current restrictions will need to remain in place, andwhich sectors can start to safely reopen. The pressure is mounting, as the longer the global economy remains inlockdown the greater the cost to industry will grow, and the greater the likelihood that more jobs will be cut.”

The 32.6 measure for the UK manufacturing industry today came after IHS Markit revised down its dire flash reading of 32.9 in March.

‘Worrying’ lack of backlogs for UK manufacturing firms

Howard Archer, chief economic adviser to the EY Item Club, said even the revised reading downplayed the impact of coronavirus on the British economy.

“This is because there was once again a marked positive contribution to the PMI from a record lengthening of supplier delivery times,” he said.

“Other elements of the survey bode ill for manufacturing activity in the near term at least. Most worryingly, new orders contracted at a record rate by far while backlogs of work were the lowest since February 2009.”

Factories in ‘disastrous’ state over lockdown

Financial services challenger Equals Group’s chief economist, Jeremy Thomson-Cook, said the data shows UK manufacturing is in a “disastrous state”.

Read more: Coronavirus: London’s dynamic economy will return

“The only bright spots seem to be those companies that exist or have repurposed their business towards the healthcare or food-related industries,” he said.

“We will be watching orders and output closely in the coming months for signs of a rekindling of the manufacturing fires.

“These are likely to be spluttering flames more than a phoenix from the ashes however, and a lot will depend on the ability of the UK government to meaningfully relax isolation protocols in the coming weeks. Safety is paramount but wrapping something too tightly in cotton wool will suffocate it.”

More to follow.