Monday 1 June 2020 9:52 am

UK manufacturing downturn continues despite signs of life

The UK’s manufacturing sector showed some signs of life in May as the coronavirus lockdown was eased, but the overall picture for Britain’s factories remained highly gloomy.

The final reading of the IHS Markit/Cips (PMI) manufacturing purchasing managers’ index came in at 40.7 in May. That was up from the record-low reading of 32.6 in April.

Read more: Eurozone manufacturing shows tentative signs of recovery in May

Officially, a reading below 50 indicates that the sector continued to contract sharply last month compared to the month before. However, some analysts have questioned this and suggested that things improved marginally for the UK’s factories after a truly dire April.

“Many respondents appear to be answering the alternate question of ‘how is activity compared to normal?’” said Andrew Wishart, UK economist at Capital Economics.

The survey data came after the government last month announced that factories could restart operations. The move was part of its “roadmap” to gradually lift coronavirus restrictions and restart the UK economy.

Some survey respondents noted that new orders picked up slightly. They said this was due to some firms in the sector cautiously reopening and lockdowns were lifted across Europe.

UK manufacturing firms slash jobs again

But overall the survey data paints a picture of a sector and a UK economy still mired in a deep depression. The 40.7 figure PMI was the seventh-worst reading ever and comparable to the financial crisis.

Data firm IHS Markit said that rates of contraction in output, new orders and new export business were among the steepest in the survey history.

Meanwhile, firms cut their numbers of workers for the fourth month in a row. Although the rate of job cuts eased from April, they were still the second fastest on record.

Read more: UK and Italy seek to further ease lockdowns as scientists urge caution

In a positive sign, confidence rose to a three-month high in response to the lifting of some lockdown measures. Yet it remained downbeat by the historical standards of the survey.

Duncan Brock, group director at Cips, the Chartered Institute of Procurement and Supply, said: “Worries over safety for returning staff and repairs to broken supply chains will be uppermost in business minds, and are obstacles to be overcome before real recovery can begin.”