UK manufacturing upturn slows further in September

According to the report from IHS Markit/CIPS, supply chain delays, slower new order growth and rising material and labour shortages all constrained the UK manufacturing sector in September. 

At 57.1, down from 60.3 in August, the seasonally adjusted PMI fell to a seven-month low. Manufacturing production increased for the sixteenth consecutive month in September. However, the rate of expansion eased for the fourth month in a row and to its weakest since February. Growth slowed across the consumer, intermediate and investment goods sectors. Data broken down by company size indicated that upturns at medium and large-scale producers were offset by a continued downturn among small firms.

Production schedules were disrupted by a combination of input shortages, longer supplier lead times and capacity constraints (including difficulties with staff shortages and hiring required skills). Average vendor lead times increased to one of the greatest extents in the survey history, amid reports of delays to air, land and sea freight, staff shortages at vendors, COVID-19 and Brexit disruptions, a lack of delivery drivers and port delays.

Weaker growth of new business also stymied efforts to increase output further during September. New orders rose at the weakest pace since February, as intakes from domestic clients increased at a slower pace and new export work contracted for the first time in eight months. The decline in new export orders reflected shipping issues, cancellations due to long lead times and capacity issues at clients.

Meanwhile, manufacturers maintained a positive outlook for the year ahead in September. Over 62% of companies forecast their output would increase during the coming 12 months, compared to only 6% expecting a contraction. The confident outlook was attributed to recoveries in both domestic and global markets, reduced difficulties from supply chains, COVID-19 and Brexit and planned new product launches.