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The seasonally adjusted manufacturing PMI (Purchasing Managers’ Index) rose to a three-month high of 58 in February, up from 57.3 in January, according to information provider IHS Markit and the Chartered Institute of Procurement & Supply (CIPS).
Faster growth of output, new orders and stocks of purchases all helped lift the PMI level, the organisations said, offsetting the impact of slower job creation. Higher new work intakes reflected trends including looser Covid-19 restrictions and improved market conditions.
In contrast, new export business decreased for the fifth time in six months, amid reports of Brexit-related issues, ongoing pandemic restrictions in trading partner nations and the loss of business from long lead times.
The outlook for the manufacturing sector remained positive, however. Almost 64% of the 650 surveyed manufacturers forecast that production would increase over the coming 12 months, taking the overall degree of optimism to a six-month high.
“February saw a welcome uplift in manufacturing activity, as the end of lockdown restrictions and more improvements in supply chain performance fuelled output growth momentum towards a seven-month high,” said Duncan Brock, group director at CIPS.
“There were certainly several positives for the UK’s manufacturing sector in February as 64% of manufacturing businesses remained optimistic. However, this success comes with a ‘health warning’, as the Ukrainian crisis deepens and the potential for higher commodity prices, disruptions to supply and economic pain must be considered by businesses as they try to build resilience into their supply chains in the coming months.”
Chris Barlow, partner at accountancy network MHA, also stressed the economic threat from the Russian invasion of Ukraine, and urged the chancellor to use the spring forecast statement to protect UK recovery. “Recent international geopolitical events – namely the conflict between Russia and Ukraine – could leave the sector facing a potential deluge of issues. Indeed, Russia’s invasion of Ukraine is set to significantly worsen existing supply chain challenges, drive up the cost of fuel and increase costs of materials such as iron and palladium.”
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