Increase in production but warning signs remain

THE UK manufacturing sector improved slightly last month compared with a five-month low recorded in March, according to new figures.

But bosses warned that the ongoing war in Ukraine, Covid lockdowns in China, and poor exports to EU customers struggling with post-Brexit paperwork are all taking their toll.

The closely-followed S&P Global/ CIPS Purchasing Managers’ Index (PMI) recorded a score of 55.8 for April, up from 55.3 in March.

Anything above 50 is seen as a sector in growth.

Bosses reported increases in production across all sub-sectors of the industry, although growth in consumer manufacturing was lower than other areas.

Companies said the outlook remains positive, although the overall degree of confidence slumped to a 16-month low, with inflation pressures causing concern.

Last month manufacturers said there was an increase in new business as companies tried to clear backlogs in work.

However, this was only small, and saw several factors holding back greater levels of growth, the survey found.

New order growth slipped to its weakest in the current 15-month upturn since the lows of the Covid19 crisis.

This was slowed due to lower demand from foreign companies for exports and higher prices due to inflation putting off some firms from spending.

Transportation issues and the war in Ukraine also affected spending as companies waited to see how the situation turned out.

The conflict has been pushing up costs, with 85% of manufacturers reporting an increase in purchase prices paid for goods, while the rate of inflation at consumer goods producers hit record highs too.

Prices were up across the board in the sector, with bosses reporting increases on chemicals, energy, food, freight, fuels, gas and metals, among others.

Manufacturers in turn passed on costs to customers, with almost 61% saying they have increased prices. Less than 1% said prices charged have fallen.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply (CIPS), said: “In spite of the softer rate of expansion in new business, the manufacturing sector held its ground in April, benefiting from work already in hand and recent easing of supply chain stresses.

“However, it is difficult to see where ongoing growth will come from in the coming months as new order growth was the most sluggish in over a year.

“Higher costs and shortages took a bite out of potential opportunities, with clients hesitating to place orders and Brexit obstacles weighing down as work from overseas shrank for a third month in a row.”