The final IHS Markit/CIPS Manufacturing PMI® for June read 50.1, unchanged from the flash report earlier in the month, and marginally above the no-change 50 mark. However, CIPS is careful to council caution over the sector’s performance in coming months.
UK manufacturing output rose slightly for the first time in four months during June, as factories restarted, clients reopened and lockdown restrictions were eased. The intermediate goods sector saw the steepest growth, while consumer goods producers saw only a mild expansion. In contrast, investment goods output fell again, albeit at a reduced pace.
Business sentiment rose to a 21-month high in June, with more than 63% of manufacturers forecasting output would rise over the coming year. Positive factors included clients reopening, expected further loosening of Covid-19 restrictions and hopes that both domestic and export markets with help recover growth lost during the pandemic.
New order intakes fell for the fourth month running but the rate of decline slowed further, mainly in response to firmer domestic demand conditions. New export business, however, fell for the eighth month running.
Employment fell for the fifth consecutive month and, although the decline eased, it remained amongst the steepest in the 28-year history of the PMI survey.
Current weak economic conditions led to lower levels of raw material purchasing and further depletion of stocks of purchases and finished goods.
Cost inflation remained subdued: although input prices rose at the fastest rate so far this year the report describes the pace as ‘mild’. Output charges also rose during June.
The report concludes with a warning from Duncan Brock, Group Director at CIPS: “The sector may be springing back into action after lockdown easing, but worse results may be on their way for companies as government support falls away and businesses are left with decisions to make on whether they can weather any continuing storms. Employment levels fell for the fifth month in a row and are still plummeting across all three sub-sectors. As companies nervously look for signs of real growth, shedding costs wherever they can in the meantime, these actions may cause damage that will take some time to fix.”