UK manufacturing maintains growth despite rising costs

Manufacturers in the UK saw another month of growth in July but are facing continued supply problems and price rises, new figures reveal.

The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) stood at 60.4 in July, reflecting the 14th consecutive month of rising output in the sector.

The index was down from 63.9 in June and the record high of 65.6 in May.

In July, companies benefited from increased new order intakes, rising client confidence and the re-opening of the economy. There was also a further increase in new export business, with improved demand from the US, the EU, China, Russia and the Middle East.

Challenges faced by UK manufacturers in July included shortages of raw materials and staff, logistic delays caused by stretched international supply chains, and price pressures due to demand outstripping supply.

“The recent surge in global manufacturing growth has led to another month of near-record supply chain delays, exacerbated by factories and their customers building up safety stocks,” said Rob Dobson, director at IHS Markit. “Some firms also noted that post-Brexit issues were still a constraint on efforts to rebuild sales and manage supply and distribution channels to the EU.”

Meanwhile, input costs rose at a near-record pace, leading to a near-record increase in manufacturers’ selling prices, Dobson added.

“Amid growing indications that many supply chain disruptions and raw material shortages are unlikely to be fully resolved until 2022, the outlook remains one of constrained growth combined with high inflation for the foreseeable future.”