April UK manufacturing PMI at record low

Posted on: May 1st, 2020 by EditorP

The IHS Markit/CIPS Purchasing Managers’ Index® for April plunged further into contraction with a reading of 32.6, compared with 47.8 in March.

Output, new orders, employment and new export business, all hit survey-record contractions, as the consequences of the coronavirus pandemic impacted manufacturing businesses. The headline PMI® contraction was moderated somewhat by the methodology of its calculation. It is a composite of five sub-indices and the record lengthening of vendor lead times makes an inverse contribution to the overall PMI. A comparatively modest reduction stocks also had a softening effect.

Respondents, unsurprisingly, identified the declines as a consequence of the coronavirus outbreak, particularly citing company closures, weak domestic and overseas demand, and labour shortages – due to both furloughing and job reductions. Record lengthening of vendor lead-times reflected logistical issues, including difficulties at borders and both air and ship freight delays, as well as supplier closures or capacity constraints. Stocks of inputs and finished goods both decreased. 

The small number of companies reporting positive trends in output or new orders were involved in producing medical products, including some repurposing to meet NHS needs, and food related goods.
Input inflation rose only slightly, as higher prices due to shortages and transport costs were partially offset by lower oil prices and suppliers reducing costs in the face of weaker demand. Selling price inflation was at a near four-year low.

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