UK Manufacturing PMI fell more than forecast in April - IHS Markit/CIPS

According to the report from IHS Markit/CIPS, the public health emergency caused by the outbreak of coronavirus disease 2019 (COVID-19) caused substantial disruption across the UK manufacturing sector and its supply chains in April. Manufacturing production, new orders and employment all contracted at the fastest rates in the 28-year survey history, while vendor lead times lengthened to the greatest extent so far. The global pandemic also hit overseas demand, leading to a series-record drop in new export business.

The seasonally adjusted Manufacturing PMI fell to a record low of 32.6 in April, down from 47.8 in March. Economists had expected a drop to 32.8. The fall in the PMI was softened by a comparatively modest reduction in stocks of purchases and record lengthening of vendor lead times (which has an inverse contribution to the PMI level). Survey data were collected between 7-27 April. Response levels were similar to those observed before the outbreak.

The survey-record contractions in output, new orders, employment and new export business were felt across the manufacturing sector, with series-record declines in each of these variables seen across the consumer, intermediate and investment goods sub-industries. Companies linked the declines to the consequences of the COVID-19 outbreak, particularly regarding company closures, weak domestic and global demand and labour shortages (following job losses and staff furloughs). In the few cases where companies reported an increase in either output or new orders, this was generally from those producing (or repurposed to produce) medical- or food-related goods.

Business sentiment also remained low by the historical standards of the survey in April. Although companies still forecast (on average) that output would be higher one year from now, the degree of positive sentiment was up only slightly from March's record low.