The UK’s manufacturing sector is growing at a rate not seen for decades, after pent-up demand was released by easing Covid-19 restrictions.
The IHS Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI), which is a closely watched sign of the sector’s fortunes, reached a record high last month, according to the most recent figures.
It rose from a score of 60.9 in April to 65.6 in May, the best score in the survey’s nearly three-decades long history.
IHS director Rob Dobson said: “The UK PMI surged to an unprecedented high in May, as record growth of new orders and employment supported one of the steepest increases in production volumes in the near 30-year survey history.
“Growth is being boosted by the unlocking of economies from Covid restrictions and ongoing vaccination programmes. This is being felt across the globe, as highlighted by a record rise in new export business during the latest survey month.”
But the survey also came with a warning over prices.
Many suppliers are struggling to keep up with the increased demand, pushing up the average delivery times to manufacturers to one of the highest levels seen in the survey’s history.
Businesses particularly highlighted shortages of electronics, plastics and metals, and there were also delays in transport.
This led to the highest rise in the cost of supplies since the survey began in 1992, causing manufacturers to increase their own prices.
Simon Jonsson, head of industrial products at KPMG UK, said: “Confidence is high among manufacturers as demand continues to soar but there’s a danger that many are only seeing the weather in front of them.
“Our closest European neighbours – France and Germany – are also witnessing similar levels of demand for their products. Supply chain bottlenecks are now starting to appear in Germany and fingers are crossed we will not see the same elsewhere.”
New export orders rose at record pace in May, with demand strong from the EU, the US and China. However the survey’s authors said this gain seems to be overwhelmingly helping big companies, while smaller firms saw a “comparatively mild” rise.