Economic Indicators

UK factory output grows at fastest rate since 2017: PMI

imageEconomic Indicators6 hours ago (Aug 03, 2020 04:55AM ET)

(C) Reuters. A worker at perforating company Bion uses a machine at the factory in Reading

By David Milliken

LONDON (Reuters) – British manufacturing output grew at its fastest pace in nearly three years in July as factories reopened and demand began to pick up after the coronavirus lockdown was eased, a closely watched business survey showed on Monday.

The IHS Markit/CIPS manufacturing Purchasing Managers’ Index (PMI) rose to 53.3 in July from June’s 50.1, broadly in line with an earlier flash estimate of 53.6 and the highest since March 2019.

The PMI’s output component – which survey compilers IHS Markit say currently gives a clearer sense of the sector’s health – rose to its highest since November 2017 at 59.3.

Orders grew for the first time in five months and optimism rose by the most in two years.

However, the index levels represent the pace of growth rather than the amount of output, and the sector has a long way to get back to where it was before the lockdown.

“Despite the solid start to the recovery, the road left to travel remains long and precarious. An extended period of growth is still needed to fully recoup the ground lost in recent months,” IHS Markit director Rob Dobson said.

Official data showed British manufacturing output collapsed by 28% over March and April, before rising 8% in May.

Car production in the first half of 2020 was the lowest since 1954 and 40% below its level in the same period of 2019, according to industry data released last week.

Britain’s future trading relationship with the European Union is also a worry for many businesses that rely on pan-European supply chains, as an 11-month tariff-free transition period ends this year, with no sign yet of a replacement deal.

UK factory output grows at fastest rate since 2017: PMI

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