UK manufacturing grows at fastest rate since April despite coronavirus impact
UK private sector output rose steadily in February as the manufacturing sector reported its fastest growth since April, new data shows.
The flash IHS Market/CIPS composite purchasing managers index (PMI), a preliminary report before final figures are released next week, gave a reading of 53.3 for February, the same figure as in January.
Any reading above 50 reflects a growth in output.
The closely-watched survey said manufacturing drove growth as the sector benefited from receding political uncertainty, which helped to increase spending by clients.
Tim Moore, associate director at IHS Markit, said: “UK private sector growth held its ground in February as a stronger contribution from manufacturing output helped to keep overall business activity on a stronger path than any time since September 2018.
“The recent return to growth signalled by the manufacturing and services PMIs provides a clear indication that the UK economy is no longer flat on its back, with our GDP forecast pointing to 0.2% growth through the first quarter of the year.”
This month’s flash manufacturing output index jumped to a reading of 52.8, from 50.1 last month.
However, it said manufacturing firms also noted that they saw headwinds rise on the back of extended shutdowns in China, with the stock of inputs falling at the fastest pace for over seven years.
Duncan Brock, group director at CIPS, said: “Manufacturing was the sector to experience faster growth as output rose to its highest for almost a year and new orders increased at a pace not seen since March 2019. However, the services sector took a small backward step.
“Supply chains were hampered by the unfolding impact of the coronavirus, extended Chinese New Year holidays and limited production in some key factories resulted in commodity and goods shortages.”
Meanwhile, the services sector has seen growth slow during February, reporting a reading of 53.3 for the month, down from 53.9 in January.
Respondents said new business growth eased from January, which had been a 19-month high, on the back of weaker demand from abroad.
Rhys Herbert, senior economist at Lloyds Bank Commercial Banking, said: “The flash suggests that investment held back by last year’s uncertainty is beginning to trickle through to provide an economic boost.
“Yet optimism will be somewhat tempered as we wait to see what impact the elephants in the room – namely coronavirus and Storms Ciara and Dennis – have on UK economic performance in February.”