The final IHS Markit/CIPS UK Manufacturing PMI® for February read 51.7 (Flash 51.9), demonstrating that output rose at the fastest pace since April 2019 as domestic demand continued to recover.
The growth, however, was concentrated in the consumer and intermediate goods sectors – the investment goods sector continued in downturn. Overall new work expanded for the second successive month and at an accelerated rate, but new export business declined for the fourth consecutive month. This particularly reflected the impact of Covid-19 on Chinese demand and a continued trend of EU supply chains being diverted away from the UK following Brexit.
The coronavirus outbreak also affected supply chains, with reports of significant delays in raw material deliveries, rising input costs and increased pressure on pre-production inventories. Stocks of purchases fell at the fastest rate in more than seven years and finished goods inventories were also eroded. A proportion of the input inflation was passed on to clients in higher factory gate prices.
Some UK manufacturers reported receiving short term orders as customers tried to cover the effect of long-range supply chain issues.
UK business optimism strengthened, although it should be noted that the survey was largely conducted in the first half of February when the full implications of Covid-19 were only beginning to register. Manufacturing employment returned to a downward trend in February, making it the tenth monthly decline in the last eleven months. The main impact was from the investment goods sector, as both consumer and intermediate goods producers reported increases in jobs.