Friday 25th Sep 2020 - Logistics & Supply Chain

Domestic demand keeps manufacturing growing

Output and new orders in the UK manufacturing sector recorded a modest expansion for May, according to the Chartered Institute of Procurement & Supply.

“Overall, the sector’s enduring driver continued to be domestic demand, as exports failed to ignite any new highs in recovery,” said CIPS chief David Noble.

The seasonally adjusted CIPS Purchasing Manager’s Index (PMI) – a summary indicator of overall manufacturing sector health – was up from a revised reading of 51.8 in April to 52.0 in May. The result has continued the run of the PMI remaining above the neutral mark of 50.0 to 26 months.

UK manufacturing production rose again in May, extending the current sequence of expansion to 27 months. However, the rate of output growth edged lower.

Noble said: “Though hopes of a stronger pace of recovery were dashed by manufacturing this month, the sector resisted repeating April’s sharp slowdown and instead delivered a further modest easing in the growth rate of activity. Though the index remained just above the no-change mark, there was an element of imbalance as the persistent dawdler continued to be the intermediate goods sub-sector, while the consumer sub-sector surged ahead.”

A further increase in incoming new business was recorded in May, with the rate of growth in new orders picking up slightly from April’s seven-month low. Companies attributed improved inflows of new work to solid domestic demand, rising client confidence and recent new product launches. However, a lacklustre performance in new business from overseas has remained, highlighted by the level of new export business holding stable in May following a modest decrease during the prior month. Companies cited both the exchange rate and soft global market conditions as factors contributing to the decrease in new work from abroad.

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