Tuesday 4 May 2021 9:48 am

UK PMIs: Manufacturing growth hits 27-year high in April

The UK’s manufacturing growth gathered pace in April as production increased for the 11th consecutive month.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index rose to 60.9 per cent last month, marking the highest reading since 1994.

Read more: Manufacturing optimism at highest levels in nearly 50 years

The reading also came in ahead of a flash estimate of 60.7.

The growth was driven by a third straight month of higher new orders, helped by stronger client confidence and the reopening of more parts of the economy.

Employment in the sector also rose for a fourth straight month due to the increase in business.

However, delays related to supply chains due to Brexit and Covid-19 and input shortages pushed prices up again, leading to fears of inflation.

Rob Dobson, director at IHS Markit, said: “Further loosening of COVID-19 restrictions at home and abroad led to another marked growth spurt at UK factories.

Before the Open: Get the jump on the markets with our early morning newsletter

“The headline PMI rose to a near 27-year high, as output and new orders expanded at increased rates. The outlook for the sector is also increasingly positive, with two-thirds of manufacturers expecting output to be higher in one year’s time.

“Export growth remains relatively subdued, however, as small manufacturers struggle to export.”

‘Surging demand brings risks’

Sarah Banks, managing director of freight and logistics at Accenture Global said: “While today’s figures are positive overall, the worsening supply situation is still a concern, with rates of both input costs and selling price inflation running far above anything previously seen.

“Shipping delays and material shortages are driving huge backlogs of uncompleted work and the surge in manufacturing orders is leading to many firms struggling to boost operating capacity to keep up with demand.

“With business expectations becoming even more optimistic as the economy rebounds, the big question will be whether firms will be able to cope with the surging inflows of new orders.”

Read more: UK PMIs: Manufacturing activity soars to decade high in March

Simon Jonsson, head of industrial products at KPMG said: “Surging demand brings risks. A concern in boardrooms is the potential inflation resulting from a full-throttle economic recovery.

“A post-pandemic return to normal will also shine a light on the true effects of Brexit. With demand for products booming, manufacturers will likely feel supply chain pinch points that have only bubbled on the surface of global trade to date.”