The latest UK manufacturing industry PMI data indicates a marked growth slowdown in the sector.

Output and new orders both expanded at reduced rates in March, while new export business contracted for the second successive month.

Manufacturers indicated that ongoing supply shortages, greater caution among clients, escalating inflationary pressures and geopolitical tensions had all hampered the upturn.

The seasonally adjusted S&P Global/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) slipped to a 13-month low of 55.2 in March, down from a three-month high of 58.0 in February. The flash estimate was 55.5.

All five of the PMI sub-components had a negative influence on its level in March. Along with weaker growth of output and new orders, there were slower upturns in both stocks of purchases and employment and a lessening in the extent to which average supplier lead times were lengthening.

Manufacturing production expanded for the 22 month in a row. However, the rate of increase eased to a five-month low, as growth decelerated across the consumer, intermediate and investment goods industries. The extent of the slowdown was especially marked at consumer goods producers.

New orders rose at the slowest pace during the current 14-month sequence of increase in March. There were reports that growth of domestic demand was less robust, while new export orders contracted for the sixth time in the past seven months. Lower intakes of work from overseas were linked to rising geopolitical tensions, ongoing difficulties following Brexit and sales lost due to distribution delays.

James Brougham, senior economist at Make UK, commented: “UK manufacturing’s recovery is being hampered from realising its full potential in this recovery period as a bitter cocktail of challenges weighs on the sector’s prospects. Continued cost pressures, that show little sign of abating, are driving astounding business-to-business price increases. With selling prices rising at their quickest pace for a quarter of the year, the longer-term implications for consumer inflation cannot be ignored.

“The invasion of Ukraine, the ongoing hangover of trade frictions following Brexit, logistics disruption and severe labour shortages make up the other ingredients in this sour cup. Nevertheless, manufacturers have demonstrated their aptitude for navigating choppy waters over the last few years, and the sector won’t be throwing in the towel as it enters this umpteenth round of the bout. Targeted support from government to address core challenges for the sector, such as spiralling industrial energy prices, will prove a lifeline should the UK want to overcome these pressures as soon as possible and return to a recovery footing.”

Make UK
www.makeuk.org