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UK February factory output grows at slowest pace since May: PMI

Top News2021-03-02


British manufacturers reported the slowest output growth since May last month, as supply-chain disruptions and rising costs linked to Brexit and COVID-19 limited their ability to respond to a modest pick-up in orders, a survey showed on Monday.

The output component of the IHS Markit/CIPS manufacturing Purchasing Managers’ Index sank to 50.5 in February from 50.7 in January, its lowest since last May.

The broader manufacturing PMI rose to a two-month high of 55.1 from January’s 54.1, a slightly bigger increase than suggested by an earlier “flash” reading of 54.9.

However, much of the rise reflects longer delivery times and higher costs - which historically were linked with increased activity but more recently have represented a constraint.

“Companies reported improved demand from several markets ... but noted that the ongoing impact of COVID-19, Brexit complications and shipping difficulties also constrained export order growth,” IHS Markit said.

Britain’s manufacturers have been less affected by the current lockdown that began in January and previous restrictions in late 2020 than other businesses, which have had to close their doors to customers.

Overall economic output in December was down 6.5% compared with a year earlier, but manufacturing was only 2.5% lower.

Confidence for the year ahead was its highest in more than six years, with 63% of firms expecting business to grow.

This is despite new post-Brexit customs rules which took effect in January and increased the cost and complexity of trade with the European Union, especially for smaller firms.

Materials costs rose at the fastest rate in four years in February and delivery times extended by one of the largest amounts in the survey’s 30 year history.

“Positive sentiment was linked to continued recovery from the pandemic, reopening of the global economy and reduced Brexit uncertainties,” IHS Markit said.


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