Experts have hailed a bit of much-needed stability in the UK manufacturing sector as new figures showed manufacturers have returned to positive territory – though only just.
British manufacturers reported small growth in June, as the IHS Markit/CIPS manufacturing purchasing managers index rose to 50.1, with 50 considered unchanged.
However, what looks like anemic growth hides a massive rise in the score from recent months. In May the survey measured 40.7, while it dropped to an all-time low of 32.6 in April.
Duncan Brock at the Chartered Institute of Procurement & Supply, which helps compile the survey, said: “June’s data shows the sector has dragged itself up from a survey-record low just two months ago into a position of no-change, as optimism rises to its highest levels for almost two years amongst manufacturers.”
The measures over the last two months reached the lowest points in the survey’s history, showing the economy has practically ground to a halt over the last few months.
But a return to slim growth for manufacturing is unlikely to be replicated in other parts of the economy in June.
Preliminary figures from the composite measure, released last week, showed that when including other sectors the score was still well below 50, at 47.6.
PMI data for the all important services sector is due out on Friday.
But the economy is set to get another boost on Saturday when lockdown restrictions ease further in England, allowing pubs and restaurants to open their doors to diners and drinkers for the first time since late March.
IHS Markit director Rob Dobson said: “The planned loosening in Covid-19 restrictions on July 4 should aid further gains in coming months. Although the trend in new export business remains weak, that should also strengthen as global lockdowns and transport constraints ease further.
“The main focus is now shifting towards the labour market. Concerns are rising about the potential for marked job losses, especially once the phase out of government support schemes begins.
“The news on that footing is less positive, with June seeing a further reduction in staffing levels and, although easing sharply since April’s record, the rate of job loss remains among the steepest in the 29-year survey history.
“Economic conditions will need to improve markedly across the UK, or some support retained, if the labour market downturn is to avoid becoming more entrenched through the remainder of the year.”