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Manufacturing recovers slightly but remains at financial crisis lows – survey

The IHS Markit/CIPS purchasing managers’ index (PMI) recorded a score of 40.7 in May, up from 32.6 in April.

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Manufacturing has improved but remains at near-record lows, a survey found (Owen Humphreys/PA)

Manufacturing has improved but remains at near-record lows, a survey found (Owen Humphreys/PA)

Manufacturing has improved but remains at near-record lows, a survey found (Owen Humphreys/PA)

Manufacturing in the UK improved slightly from the all-time lows of April but still remains at levels not seen since the global financial crisis, according to new figures.

The closely-followed IHS Markit/CIPS purchasing managers’ index (PMI) recorded a score of 40.7 in May, up from 32.6 in April, as the coronavirus lockdown started to ease and orders rose.

However, the data also showed output, new orders and employment in the sector all fell at some of the fastest rates in the 28-year survey’s history.

Even with the slight uplift in May’s sentiment as firms began to recover from the initial shock and looked to the future, optimism remained depressedDuncan Brock, CIPS

At 40.7 for May, the score was the seventh-lowest ever even as some factories started reopening and global easings of lockdowns saw business increase. The growth came in healthcare and PPE areas, the survey added.

Jobs in the sector fell for a fourth successive month as companies laid off workers, despite furlough schemes in place to protect them.

Although confidence rose to a three-month high, it remained downbeat by the historical standards of the survey.

With factories opening and employees allowed to return to work under new “Covid Secure” conditions, manufacturers noted that lead times remain lengthened.

Prices for products increased slightly but this was offset by suppliers offering discounts on unsold stock from the lockdown, it added.

Rob Dobson, director at IHS Markit, which compiles the survey, said: “Those who typically see the glass half-empty will note that the UK manufacturing sector remained mired in its deepest downturn in recent memory.

“Output, new orders and employment fell sharply again in May as restrictions to combat the spread of Covid-19 caused further widespread disruptions to economic activity, demand and global supply chains.

“However, the glass half-full perspective is one where the rate of contraction has eased considerably since April, meaning – absent a resurgence of infections – the worst of the production downturn may be behind us.”

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Even with the slight uplift in May’s sentiment as firms began to recover from the initial shock and looked to the future, optimism remained depressed.

“Worries over safety for returning staff and repairs to broken supply chains will be uppermost in business minds and are obstacles to be overcome before real recovery can begin. Uncertainty remains the watchword for the months ahead.”

PA