Article 50 fails to knock manufacturing confidence, PMI shows
The triggering of Brexit negotiations has not dampened optimism in the manufacturing sector, a poll of buyers has shown.
The growth of output and new business slowed slightly following recent highs, but remained strong compared with the long run average, according to data from this month’s Markit/CIPS UK Manufacturing PMI.
The index – a monthly survey of buyers designed to track changes in activity – dropped slightly to 54.2 in March, down from 54.5 in February. A score above 50 signifies growth. A score below 50 indicates contraction.
Since the vote to leave the European Union (EU) in June, the manufacturing sector has “completed a remarkable return to confidence”, said Duncan Brock, director of customer relationships at CIPS. Production at factories had increased for the eighth consecutive month, albeit its slowest growth in this time, and employment grew at the fastest rate in nearly a year and a half.
“The beginning of formal negotiations with the EU has failed to dampen the sense of optimism and manufacturers expect production to continue growing in the year ahead,” Brock said.
The domestic market was the main source of new business. The weak value of the pound helped to increase export competitiveness, though to a lesser degree than in previous months.
But the value of the pound also contributed to the 11th consecutive rise in input costs, with consumers feeling the effects. Brock also warned of “trouble brewing at the base of [manufacturing] supply chains”, and cautioned against over-confidence. Supplier delivery times have slowed, “clogging up the supply chains of British manufacturing”, he said.
“With the rate of new order growth showing early signs of easing in March, manufacturers must act to ensure they are not locked into costly contracts. Now is not the time for manufacturers to rest on their laurels,” said Brock.