UK manufacturing stabilises in June following severe COVID-19 downturn

According to the report from IHS Markit/CIPS, the UK manufacturing sector showed signs of stabilising in June, following the recent steep downturn caused by the coronavirus disease 2019 (COVID-19) pandemic. Output edged back into growth territory as factories restarted, lockdown restrictions were loosened and staff returned to work.

The seasonally adjusted IHS Markit/CIPS PMI rose to 50.1 in June, up from 40.7 in May and unchanged from the flash estimate. Although the 9.4 point month-on-month rise in the PMI beat May's record (8.1), the reading was only slightly above the neutral 50.0 mark, indicating a stabilisation (not marked improvement) in operating conditions. Survey data were collected between 12-25 June. 

Manufacturing production 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 vastly reduced pace.

Business sentiment rose to a 21-month high in June. Over 63% of manufacturers forecast that output would rise over the coming year. Positive sentiment was linked to clients reopening, an expected further loosening of COVID-19 restrictions and hopes that markets would revive at home and overseas to help recover growth lost during the pandemic.

Rob Dobson, Director at IHS Markit, which compiles the survey, said: “June completed a marked turnaround in momentum in UK manufacturing, as the sector switched from April's record contraction back to stabilisation in the space of two months. Output edged higher and domestic demand firmed as lockdown restrictions loosened, factories restarted and staff returned to work. Business optimism also recovered to a 21-month high. The planned loosening in COVID 19 restrictions on the 4th July should aid further gains in coming months. Although the trend in new export business remains weak, that should also strengthen as global lockdowns and transport constraints ease further.”