UK manufacturing PMI rose to a ten-year high in March

According to the report from IHS Markit/CIPS, the upturn in the UK manufacturing sector gained further momentum at the end of the third quarter. March saw the fastest output growth since late-2020, as inflows of new business from both domestic and overseas markets strengthened. The sector remained beset by severe supply chain and logistic issues, however, leading to delivery delays from suppliers and disruption to production and distribution schedules.

The seasonally adjusted PMI rose to a decade-high of 58.9 in March, its best outcome since February 2011. The PMI level was supported by improved growth of output, new orders and employment along with increased supplier lead times.

A slower decrease in stocks of purchases also had a positive impact on the latest reading compared to one month ago. Manufacturing output increased for the tenth successive month and at the quickest pace since last November. Solid and accelerated growth was signalled in both the intermediate and investment goods industries. Consumer goods production returned to expansion following back to back contractions.

Higher output was linked to improved new order intakes, the vaccine roll-out and preparations for the planned loosening of lockdown restrictions. New business rose at the second fastest pace for over three years, with growth registered at consumer, intermediate and investment goods producers alike. 

The ongoing rebound in domestic and global economic conditions underpinned increased optimism and job creation at UK factories. Business sentiment was at its most elevated for seven years, hitting unsurpassed levels at both consumer and investment goods producers. Almost two-thirds of manufacturers expect output to rise over the coming year (only 6% expect a contraction).